Best Buy stock sinks after it cuts guidance due to Trump's tariffs

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Best Buy stock sinks after it cuts guidance due to Trump's tariffs.

companies :: 2025-05-29 :: source - yahoo finance

By Brooke DiPalma

Best Buy (BBY) investors are disappointed on Thursday morning as the retailer reports mixed earnings and cuts guidance over Trump administration's tariffs.

Same-store sales fell 0.7% year over year, more than the 0.57% Wall Street expected. Revenue fell 0.9% to $8.77 billion, missing estimates of $8.80 billion. Adjusted earnings per share slid 4% to $1.15, beating estimates of $1.09.

In the release, Best Buy CEO Corie Barry said the team had to navigate and plan "within dynamic macroeconomic conditions.”

The company cut its 2025 sales and earnings guidance.

It now expects revenue of $41.1 billion to $41.9 billion, down from previous projection of $41.4 billion to $42.2 billion. Adjusted EPS is expected to be $6.15 to $6.30, lower than the prior forecast of $6.20 to $6.60. The update to the guidance now incorporates the "impact of tariffs," CFO Matt Bilunas said in the release.

Same-store sales are expected to be down 1% to up 1% for the year, versus the previous range of flat to up 2%.

The guidance assumes "tariffs stay at the current levels for the rest of the year, and there is no material change in consumer behavior from the trends we have seen in recent quarters," per Bilunas.

Ahead of the report, Telsey Advisory Group's Joe Feldman said in a note he anticipates a return to slight same-store sales growth in 2025, "followed by accelerated growth and a return to higher earnings in 2026."

Shares were down 3% in pre-market trading and down more than 16% year to date, compared to the S&P 500 (^GSPC) remaining flat.

Earnings breakdown

Here's what Best Buy posted in the first quarter, compared to Bloomberg estimates:

Adjusted earnings per share: $1.15 versus $1.09

Net sales: $8.77 versus $8.80 billion

Same-store sales growth overall: -0.70% versus -0.57%

Total US same-store sales growth: -0.70% versus -0.62%

Sales growth for:

Appliances: -8.10% versus -7.07%
Entertainment: -13.30% versus -5.64%
Consumer electronics: -5.20% versus -2.20%
Computing and mobile phones: +5.80% versus +3.17%
Services: 0.9% versus +4.00%

International: -0.70% versus -0.09%

Trump administration's tariffs and falling consumer sentiments remain its top headwinds. In a previous earnings call, Barry said China and Mexico are Best Buy's top two sources for products.

"Let's call it about 55% of what we sell is sourced through China in some way, shape, or form, and another approximately 20% comes through Mexico," she said. "Which means the vast majority of the product assortment that we have in some way, shape, or form right now is subject to some level of tariffs."

Most recently, the US temporarily dropped tariffs on Chinese imports from 145% to 30% for 90 days, while so-called reciprocal tariffs were suspended for a 10% universal duty. Then on Wednesday night, a US trade court blocked President Trump's tariffs.

Barry had said second quarter to fourth quarter results would feel the brunt of the tariff impact.

"It should be able to manage costs relatively well and leverage its leadership within consumer electronics to come out of the current environment on top," Feldman wrote.

However, Wedbush analyst Matthew McCartney said in terms of mitigation tactics, "the complexity of the electronics supply chain and its deep ties to China make this difficult to do quickly."

The "largest risk" to Best Buy's top line would be that electronic costs "increase materially," he said.

Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.