Tariffs Hit Best Buy Revenues As Retailer Reduces Chinese Imports

U.S. consumer electricals giant Best Buy missed quarterly revenue expectations and cut its full-year sales and profit guidance amid the impact of higher tariffs.

Despite a judicial decision that could yet derail President Trump’s intended tariff deals, retailers have been caught in the crosshairs for the past two months and for its fiscal 2026 the retailer downgraded revenue expectations to the $41.1 billion to $41.9 billion range, down from its previous range of $41.4 billion to $42.2 billion.

Best Buy said that it has already increased prices on some items because of the increased costs from tariffs, with changes having taken effect by mid-May.

Shares dropped by around 8% after the financial update and are down about 24% since the start of the year, with much of that fall off occurring after President Trump made the first tariff announcements.

On an earnings call Best Buy CEO Corie Barry said price hikes were “the very last resort” after the company took other measures to offset higher expenses but it is far from the only U.S. retailer to post first-quarter earnings that have highlighted just how disruptive the global trade wars have been.

On the latest developments, Barry reflected that the latest legal ruling reinforced that the company had to stay agile amid uncertainty.

“If you look back over the last, let’s call it four months, the variety of points where there has been a change in approach to global trade, they are myriad,” she said. “And so what I really tried to work with the team on is to not actually overreact to any given moment in time, but instead to stay maniacally focused on our customers and ensure we are bringing the right assortment price and promotionality to them, whatever the backdrop.”

Best Buy’s net income in the three-month period ending May 3 declined about 18% to $202 million from $246 million in the year prior period and first-quarter revenue dropped from $8.85 billion in the year-ago period.

Comparable sales, which Best Buy defined as revenue from online sales and stores open at least 14 months, dropped 0.7% year on year. In the U.S., comparable sales also fell 0.7% year over the same period as shoppers bought fewer home theaters, appliances and drones, though there was growth in the computing, cell phone and tablet categories.

Best Buy Reduces Chinese Imports

Barry added that while China continues to be a major source of merchandise, the country now accounts for 30% to 35% of its merchandise compared with 55% when it shared the same information in March. About a quarter of its merchandise comes from the U.S. or Mexico, which do not have tariffs because of domestic production or exemptions, she said.

The remaining approximately 40% comes from other countries, including Vietnam, India, South Korea and Taiwan, which are subject to a 10% tariff.

Best Buy has also encouraged vendors to manufacture in multiple countries, negotiated lower costs and adjusted the mix of merchandise that it carries, she said, while the company has also expanded in Canada.

Barry said that Best Buy’s strategic priorities include improving the customer experience to better connect its digital and in-store businesses, launch and grow its third-party marketplace and retail media businesses, and drive efficiency.

After getting a boost from Americans splurging on home offices and entertainment centers in the pandemic, Best Buy has struggled with sales declining the past three years.

One hurdle for the retailer has been a lack of hit tech products to lure shoppers but Barry was also able to highlight new product launches such as the Nintendo Switch 2 video game console that will debut this summer. Best Buy is offering preorders and will throw open its doors at midnight June 5 to allow customers to pick up their consoles or get a new game.

Smartphone sales have been another strong category for Best Buy and Verizon and AT&T have both increased staffing at Best Buy stores to cater for increased demand.