Adds details from the call in paragraph 4, background in paragraph 3 and 5

By Anuja Bharat Mistry

March 3 (Reuters) - Best Buy BBY.N forecast muted annual sales and profit on Tuesday due to an uncertain and volatile macroeconomic environment, casting a shadow on the U.S. electronics retailer's stronger-than-expected holiday quarter profit.

Shares of the company pared premarket gains to trade up 5% amid broader market declines.

The company 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.

On Tuesday, Best Buy said it expects lower U.S. tariff rates following the Supreme Court's decision to strike down the government's emergency levies. However, like Swiss shoemaker On Holding, it noted that it has not yet "modeled major impacts" from the change into its annual outlook.

Best Buy, which imports about 55% of products from China, had initiated several steps last year including price hikes on certain products, manufacturing flexibility, cost negotiations and supply chain diversification.

The retailer now projected full-year comparable sales to be down 1% to up 1%, compared with analysts' estimates of a 1.63% rise.

Its adjusted earnings per share forecast range of $6.30 to $6.60 was also below estimates of $6.66.

"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%, with CEO Corie Barry saying that customer demand was softer for the industry.

However, Best Buy 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 quarter ended January 31, down from $11.03 billion a year earlier.

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

"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.