Adds details on memory chip shortage in paragraph 1- 4

By Anuja Bharat Mistry

March 3 (Reuters) - Best Buy BBY.N is rushing to import computers and other electronics and work with suppliers to deal with soaring memory prices, even as it sees potential relief from declining U.S. tariff rates, the retailer said on Tuesday.

It reported a strong holiday quarter and some prospects of growth this year, relieving some investors and sending shares up 7% in afternoon trading amid a slump in the broader market.

Company executives on Tuesday acknowledged that the soaring prices for memory chips — stemming from a supply shortage caused by the tech industry racing to build out artificial intelligence capacity — have added to their costs.

"Increased demand for memory components is driving cost inflation and supply uncertainty," CEO Corie Barry said on a post-earnings call, adding that the company was bringing in as much inventory as they can. "In some cases, we might narrow our assortment so we absolutely know we have the more rationalized assortment to meet their needs."

The company also joined Swiss sportswear On Holding ONON.N in signaling a lower U.S. tariff rate following the Supreme Court's decision to strike down the government's emergency levies but has not modeled "major impacts" from the change in this year's outlook.

"There's still a lot of moving pieces, there's still a lot to be figured out," Barry said on the call, referring to tariffs.

Best Buy, which imports about 55% of products from China, said it has been negotiating costs, diversifying its supply chain and adjusting assortments to mitigate the tariff impact. The retailer said it would make price adjustments as a last resort.

It projected full-year comparable sales to be down 1% to up 1%, compared with analysts' estimates of a 1.63% rise, and targeted adjusted earnings per share of $6.30 to $6.60, behind estimates of $6.66, but that was enough to relieve Wall Street.

"The guide signals modest growth with overall demand normalization – which was better than feared," Evercore ISI analyst Greg Melich said.

COST CUTS DRIVE PROFIT BEAT

In the all-important holiday quarter, comparable sales declined 0.8%, versus the analysts' average estimate of a 0.25% rise, with Barry flagging softer customer demand for the industry.

On an adjusted basis, the company posted a quarterly profit of $2.61 per share, compared with estimates of $2.47, according to data compiled by LSEG.

Best Buy has been under pressure as Americans grappling with rising living costs — driven in part by tariffs and an uneven labor market — prioritize value and delay big-ticket purchases such as home theater systems and appliances.

However, the company managed to trim costs during the reported quarter, including lowering expenses at Best Buy Health in the U.S.

Its cost of sales came in at $10.93 billion in the three months ended January 31, down from $11.03 billion a year earlier. Overall sales in the quarter declined 1% to $13.81 billion, while analysts were estimating sales of $13.88 billion.

Newer initiatives like marketplace and Best Buy ads also helped grow profits, despite higher promotions.

"Best Buy delivered a fourth quarter that underscored the company's operational resilience in a challenging consumer environment, though the results revealed the mounting headwinds facing the business as it enters fiscal 2027," said Ana Garcia, analyst with CFRA Research.

(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Aishwarya Venugopal, Sriraj Kalluvila and Alan Barona)

((AnujaBharat.Mistry@thomsonreuters.com))