Best Buy CEO Warns of Price Increases From Tariffs; Stock Drop Follows Q2 Results

Best Buy CEO Hubert Joly said tariffs could lead to price hikes for consumers, on a Tuesday earnings call after reporting results for its Q2 ended Aug. 4 that accompanied a stock decline. “When there’s a price increase, there’s an impact,” he said, though the Trump administration has “very important international trade goals.” Effects from tariffs will be “tightly linked” to gross profit margins, Joly said. A 25 percent tariff on an item with a gross profit of 20 percent will result in a 20 percent price increase, said the executive, noting vendors’ ability to absorb tariffs and over time diversify their supply base. The retailer's Q2 online sales growth slowed to 10 percent after 31 percent sales growth in the year-ago quarter over the prior-year quarter, said Chief Financial Officer Corie Barry, underscoring the retailer’s “mature” position in e-commerce. It's gaining market share online, said Barry, now at 15 percent of domestic revenue. Barry called the consumer electronics segment “mature,” with customer buying patterns that moved online “earlier than most.” But the company beat some expectations in Q2 on strength in wearables, mobile phones and gaming, she said. The stock closed the day down 5 percent at $77.57.