Best Buy stock plunges as the chain braces for tariff impact

Best Buy (BBY) is turning around a three-year decline in sales growth — but it's not enough to keep investors satisfied.

On Tuesday before the market open, the electronics retailer reported fourth quarter results that beat Wall Street's expectations. Same-store sales jumped 0.5%, compared to a 1.45% decrease anticipated. This comes after 12 consecutive quarters of negative same-store sales growth.

“I am pleased to report better-than-expected sales for the fourth quarter driven by strong growth in computing as well as improved sales performance in other categories,” Best Buy CEO Corie Barry said in the release.

This coming fiscal year, the company expects revenue of $41.4 billion to $42.2 billion. Wall Street expected guidance of $41.69 billion. Same-store sales are expected to be flat to up 2%, compared to estimates of a 1.44% increase.

Adjusted earnings per share are projected to be $6.20 to $6.60 for the year; Wall Street had estimated $6.55. The guidance does not include the impact of tariffs.

Best Buy stock plummeted 14% on Tuesday morning, as investors digest the "uncertainty of tariffs" and the potential impact, Telsey Advisory Group Joe Feldman told Yahoo Finance, who said he wasn't surprised at the reaction. He added, "excluding tariffs, the 2025 guidance was solid."

The replacement cycle is kicking in around laptops, notebooks, and phones, especially as innovation around AI ramps up. Evercore analyst Greg Melich called the year a "sweet spot" for the four-to-five-year replacement cycle since the pandemic spending spree started in 2020.

Barry said the Geek Squad played a key role in helping "customers understand what is unique about Copilot+ AI PCs" or seeing if they want to upgrade ahead of the "upcoming Windows 10 upgrade cycle."

"We continue to see a consumer that is willing to spend on high price point products when they need to or when there is technology innovation," CFO Matt Bilunas said in the release.

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

Adjusted earnings per share: $2.58, versus $2.40

Net sales: $13.95 billion, versus $13.69 billion

Same-store sales growth overall: 0.5%, versus -1.45%

Total US same-store sales growth: 0.2%, versus -1.34%

Sales growth for:

• Appliances: -11.4%, versus -8.9%

• Entertainment: -10.9%, versus -7.47%

• Consumer electronics: -2.2%, versus -4.38%

• Computing and mobile phones: 6.5%, versus 4.13%

• Services: 9.9%, versus 4.38%

International: 3.8% versus -1.95%