Dive Brief:

• Best Buy on Thursday reported that second quarter domestic revenue rose 2.1% to $8.8 billion, thanks in part to contributions from the company’s year-old GreatCall unit (partly offset by the closure of 13 big box stores in the past year). Overall revenue rose 1.7% to $9.5 billion from $9.4 billion in the year-ago period, according to a company press release.

• Topline revenue also benefited greatly from U.S. comparable sales growth of 1.9%, the company said. U.S. online comps rose 17.3%, while international comps declined 1.9%. Overall, comps rose 1.6%.

• Higher supply chain costs dug into profits, but the domestic gross profit rate expanded by 20 basis points, thanks to GreatCall’s higher rate, to 24% from 23.8% last year. Net income edged down to $238 million from $244 million a year ago.

Dive Insight:

Tariffs threaten to mess with Best Buy's momentum, but executives and some analysts on Thursday said they believe the electronics retailer can weather them and the uncertainty they're creating.

The company narrowed its fiscal year guidance on Thursday based in part on how it expects tariffs to impact not just costs, but also the effect on consumer buying behavior, Best Buy CFO Matt Bilunas said in a statement. The company now says it expects total revenue to reach $43.1 billion to $43.6 billion, compared to its previous expectation for $42.9 billion to $43.9 billion, and comps to grow 0.7% to 1.7%. Its previous guidance for comps were for a 0.5% to 2.5% rise.

CEO Corie Barry told analysts Thursday morning that there is both "art and science" in determining how tariffs might affect sales and profits and how much any price increases might be passed on to customers. "We're always going to be price competitive," she said, adding later that the back-and-forth announcements and rhetoric on tariffs have made their potential impact "almost impossible" to quantify.

While shares fell as many investors were rattled by the adjustment, Moody's Investors Service analyst Charlie O'Shea focused on its increase on the bottom end. "Despite uncertainty surrounding potential tariffs, the Best Buy’s raising of guidance indicates that it believes it can weather whatever tariff situation results with minimal upset," he wrote in emailed comments.

Indeed, the company is protected on several fronts. While its gaming sales have been challenged recently, the retailer offers a broad assortment and is taking share in appliances given up by Sears, according to GlobalData Retail Managing Director Neil Saunders. Its smart home offering is "one of the most comprehensive" and Best Buy "has been quick to showcase new and innovative brands and to back this with compelling in-store displays and good levels of customer service," he said in comments emailed to Retail Dive, adding those are reasons that its stores "remain a destination for shoppers" and provide "a strong differentiator over rivals — especially online players like Amazon."

The company is also expanding its customer base by offering a lease-to-own program that helps shoppers who don't have the credit profile needed for its store card. That is in its early stages and continues to be refined, Barry said.

O'Shea hailed the retailer's ability to protect earnings despite the promotional pressure in the period. "Best Buy’s Q2 results are impressive from a profitability perspective, especially given the heavy promotions that occurred in July surrounding Prime Day," he said.

Omnichannel is another area where Best Buy is rising to the challenge thrown down by Amazon earlier this year when it shortened Prime shipping from two days to one, Saunders said. "With around 40% of online orders now being picked up in store, Best Buy is also in a good position to protect both margins and market share as the online shipping wars intensify," he said, also noting the extent of the retailer's same-day and next-day delivery options. "Enabling convenience and speed has been an important factor in allowing Best Buy to compete with online rivals."

While its high-touch services differentiate the retailer, add to revenue and further its momentum, however, product sales and growth could suffer next year amid "a more challenging consumer economy," Saunders also warned.