Financial Data and Key Metrics Changes - The company reported revenue of $9.4 billion for Q2, with an adjusted operating income rate of 3.9% and adjusted earnings per share of $1.28, marking a 1.6% increase in revenue year-over-year [5][36] - Comparable sales growth of 1.6% was the highest in three years, driven by new technology innovations and a strong omnichannel customer experience [5][36] - The adjusted operating income rate decreased by 20 basis points compared to last year, while the adjusted diluted earnings per share decreased by 4% [36] Business Line Data and Key Metrics Changes - Sales growth was observed in gaming, computing, mobile phones, wearables, and headphones, while declines were noted in home theater, appliances, tablets, and drones [5][6][37] - Gaming sales saw significant growth due to the successful launch of the Switch 2, with strong results in console sales and related peripherals [6][37] - Computing experienced its sixth consecutive quarter of sales growth, achieving the highest second-quarter laptop unit sales in 15 years [7][37] Market Data and Key Metrics Changes - Domestic revenue increased by 0.9% to $8.7 billion, with comparable sales growth of 1.1% [37] - International revenue rose by 11.3% to $740 million, driven by comparable sales growth of 7.6% and revenue from new Best Buy Express locations in Canada [37] - Online sales accounted for 33% of domestic sales, continuing to grow year-over-year for the third consecutive quarter [9] Company Strategy and Development Direction - The company aims to strengthen its position as a leading omnichannel destination for technology while building new profit streams [12][22] - Strategic priorities include enhancing omnichannel experiences, launching a marketplace to increase product availability, and driving efficiencies in operations [12][22][27] - Partnerships with vendors are emphasized, with a focus on expanding product assortments and improving customer experiences [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's plans for the second half of the year, despite uncertainties related to tariffs and consumer spending [11][40] - The company is maintaining its annual guidance, expecting revenue between $41.1 billion and $41.9 billion, with comparable sales projected to be flat to up 1% [40][41] - Management noted that customer behavior remains resilient, with a focus on high-ticket purchases when necessary [10][62] Other Important Information - The company reported the lowest employee turnover rates in ten years and higher engagement scores in employee surveys [10] - Vendor labor investment is expected to increase by approximately 20% in the second half of the year, reflecting strong partnerships [56][58] - The company is implementing a new data-driven sourcing solution to enhance supply chain efficiency [28][29] Q&A Session Summary Question: Market share performance in Q2 - Management feels better about market share position, indicating good momentum in Q2 and a flattish share overall [48] Question: Third quarter comparable sales expectations - Management expects Q3 comparable sales growth to be similar to Q2, driven by continued growth in gaming and mobile computing [52] Question: Vendor support and labor investment - Management highlighted increased vendor support, including labor and physical space investments, which are expected to enhance customer experience [56][58] Question: Consumer reaction to tariff price increases - Management noted that tariff impacts were in line with expectations, with mitigation strategies in place to manage costs [62][63] Question: Performance of the Switch 2 - The Switch 2 launch exceeded expectations, contributing positively to sales guidance for the back half of the year [102]

Core Viewpoint - Best Buy's Q2 performance exceeded expectations, driven by strong demand for gaming and computer equipment, which helped offset the impact of new tariffs [1][2] Financial Performance - Q2 revenue reached $9.44 billion, a 1.6% year-over-year increase, surpassing market expectations by $210 million [1] - Non-GAAP earnings per share were $1.28, exceeding market expectations by $0.06 [1] - Comparable sales grew by 1.6%, with domestic revenue of $8.7 billion, up 0.9% year-over-year, primarily due to a 1.1% increase in comparable sales [1] - International revenue was $740 million, a 11.3% year-over-year increase, driven by a 7.6% rise in comparable sales and revenue from new Best Buy Express stores in Canada [1] Restructuring and Costs - The company incurred $114 million in restructuring costs related to a company-wide restructuring plan, including employee severance benefits and approximately $40 million in asset impairment [1] Product Demand and Market Recovery - Best Buy benefited from the release of popular new products like the Nintendo Switch 2, marking the end of a 14-quarter sales decline [1] - The company is recovering from decreased spending in product categories like home theater equipment, which had negatively impacted performance during the pandemic [1] Financial Guidance - The company maintained its full-year financial outlook, reaffirming adjusted diluted earnings per share guidance of $6.15 to $6.30 [2] - Full-year revenue is expected to be between $41.1 billion and $41.9 billion [2]

Best Buy reported better-than-expected results in the second quarter, with strong demand for gaming and computer equipment helping to offset the impact of new tariffs https://t.co/5npmwuXcA7 ...

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Best Buy reported a **1.6% comparable sales growth** in Q2 FY26, the highest in three years, with total enterprise revenue reaching **$9.438 billion**, while management remains confident in the second half outlook and reaffirms FY26 guidance [Q2 FY26 Performance Overview](index=1&type=section&id=Q2%20FY26%20Performance%20Overview) Best Buy achieved a **1.6% comparable sales growth** in Q2 FY26, the highest in three years, with total enterprise revenue reaching **$9.438 billion**, though diluted and adjusted diluted EPS both declined | Metric | Q2 FY26 | Q2 FY25 | Change (%) | | :-------------------------------- | :------ | :------ | :------- | | **Revenue ($ in millions):** | | | | | Total Enterprise Revenue | $9,438 | $9,288 | 1.6% | | Domestic Revenue | $8,698 | $8,623 | 0.9% | | International Revenue | $740 | $665 | 11.3% | | **Comparable Sales % Change:** | | | | | Total Enterprise Comparable Sales | 1.6% | (2.3)% | +3.9 pp | | Domestic Comparable Sales | 1.1% | (2.3)% | +3.4 pp | | Domestic Online Comparable Sales | 5.1% | (1.6)% | +6.7 pp | | International Comparable Sales | 7.6% | (1.8)% | +9.4 pp | | **Operating Income %:** | | | | | Operating Income as % of Revenue | 2.7% | 4.1% | -1.4 pp | | Adjusted Operating Income as % of Revenue | 3.9% | 4.1% | -0.2 pp | | **Diluted Earnings Per Share (EPS):** | | | | | Diluted EPS | $0.87 | $1.34 | -35.1% | | Adjusted Diluted EPS | $1.28 | $1.34 | -4.5% | [Management Commentary & Outlook](index=1&type=section&id=Management%20Commentary%20%26%20Outlook) CEO Corie Barry attributes Q2 sales growth to new tech innovation and strong partnerships, while CFO Matt Bilunas anticipates similar Q3 comparable sales growth and reaffirmed FY26 guidance towards the upper end of the range - Q2 sales growth was primarily driven by **new technology innovation**, seamless omnichannel customer experience, and strong vendor partnerships[3](index=3&type=chunk) - The company anticipates more tech innovation, new store experiences, and the launch of Best Buy Marketplace in the second half of the year[3](index=3&type=chunk) - Q3 FY26 outlook projects comparable sales growth similar to Q2 and an adjusted operating income rate consistent with last year's Q3 at **3.7%**[3](index=3&type=chunk) [Consolidated Financial Performance](index=6&type=section&id=Consolidated%20Financial%20Performance) The company reported a **1.6% revenue increase** in Q2 FY26, but net earnings and diluted EPS declined due to restructuring, while total assets slightly decreased and cash flow from operations saw a minor reduction [Consolidated Statements of Earnings](index=6&type=section&id=Consolidated%20Statements%20of%20Earnings) In Q2 FY26, revenue increased by **1.6%** year-over-year, but net earnings and diluted EPS declined due to restructuring charges and a lower operating income rate, with similar trends for the year-to-date period | Metric ($ in millions, except per share) | Q2 FY26 | Q2 FY25 | YTD FY26 | YTD FY25 | | :------------------------------------- | :------ | :------ | :------- | :------- | | Revenue | $9,438 | $9,288 | $18,205 | $18,135 | | Cost of Goods Sold | $7,244 | $7,102 | $13,962 | $13,885 | | Gross Profit | $2,194 | $2,186 | $4,243 | $4,250 | | Gross Profit Rate % | 23.2% | 23.5% | 23.3% | 23.4% | | Selling, General and Administrative Expenses | $1,829 | $1,810 | $3,550 | $3,547 | | Restructuring Charges | $114 | $(7) | $223 | $8 | | Operating Income | $251 | $383 | $470 | $695 | | Operating Income Rate % | 2.7% | 4.1% | 2.6% | 3.8% | | Net Earnings | $186 | $291 | $388 | $537 | | Diluted EPS | $0.87 | $1.34 | $1.82 | $2.47 | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) As of August 2, 2025, total assets slightly decreased primarily due to reduced goodwill, while current assets increased and total liabilities remained relatively stable, leading to a decrease in equity | Metric ($ in millions) | August 2, 2025 | August 3, 2024 | | :------------------- | :------------- | :------------- | | **Assets:** | | | | Cash and Cash Equivalents | $1,456 | $1,387 | | Merchandise Inventory | $5,816 | $5,706 | | Total Current Assets | $8,877 | $8,562 | | Goodwill | $908 | $1,383 | | Total Assets | $15,253 | $15,624 | | **Liabilities and Equity:** | | | | Accounts Payable | $5,682 | $5,542 | | Total Current Liabilities | $8,553 | $8,451 | | Total Liabilities | $12,537 | $12,407 | | Equity | $2,716 | $3,107 | | Total Liabilities and Equity | $15,253 | $15,624 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended August 2, 2025, cash flow from operations slightly decreased, cash used in investing activities increased for property and equipment, and cash used in financing activities also rose due to share repurchases and dividends, resulting in a lower period-end cash balance | Metric ($ in millions) | YTD August 2, 2025 | YTD August 3, 2024 | | :------------------- | :----------------- | :----------------- | | Net Cash Provided by Operating Activities | $783 | $817 | | Net Cash Used in Investing Activities | $(369) | $(352) | | Net Cash Used by Financing Activities | $(574) | $(557) | | Cash and Cash Equivalents at End of Period | $1,713 | $1,698 | [Segment Performance](index=3&type=section&id=Segment%20Performance) Domestic revenue increased by **0.9%** driven by computing and mobile phones, while international revenue grew by **11.3%** with strong comparable sales, though both segments experienced product margin rate declines [Domestic Segment Results](index=3&type=section&id=Domestic%20Segment%20Results) Domestic revenue grew by **0.9%** driven by comparable sales increases in gaming, computing, and mobile phones, but partially offset by declines in other categories, while gross profit rate slightly decreased and adjusted SG&A as a percentage of revenue remained flat | Metric | Q2 FY26 | Q2 FY25 | YTD FY26 | YTD FY25 | | :-------------------------------- | :------ | :------ | :------- | :------- | | Revenue ($ in millions) | $8,698 | $8,623 | $16,825 | $16,826 | | Comparable Sales % Change | 1.1% | (2.3)% | 0.2% | (4.3)% | | Comparable Online Sales % Change | 5.1% | (1.6)% | 3.7% | (3.8)% | | Gross Profit Rate % | 23.4% | 23.5% | 23.4% | 23.4% | | Adjusted SG&A as % of Revenue | 19.3% | 19.3% | 19.4% | 19.3% | | Adjusted Operating Income ($ in millions) | $351 | $364 | $680 | $689 | | Adjusted Operating Income as % of Revenue | 4.0% | 4.2% | 4.0% | 4.1% | - Domestic comparable sales growth was primarily driven by **gaming**, computing, and mobile phones, partially offset by declines in home theater, appliances, tablets, and drones[5](index=5&type=chunk) - The decline in domestic gross profit rate was mainly due to lower product margin rates, partially offset by improved services margin rates, with product margin rate decline driven by an increased mix of lower-margin categories[7](index=7&type=chunk) - Increased domestic adjusted SG&A expenses were primarily due to higher compensation costs (including medical claims), the absence of a favorable legal settlement from the prior year, and technology investments, partially offset by reduced Best Buy Health expenses[8](index=8&type=chunk) [International Segment Results](index=3&type=section&id=International%20Segment%20Results) International revenue increased by **11.3%** due to **7.6% comparable sales growth** and contributions from new Best Buy Express stores in Canada, despite a decline in gross profit rate primarily from lower product margins, while adjusted SG&A as a percentage of revenue improved | Metric | Q2 FY26 | Q2 FY25 | YTD FY26 | YTD FY25 | | :-------------------------------- | :------ | :------ | :------- | :------- | | Revenue ($ in millions) | $740 | $665 | $1,380 | $1,309 | | Comparable Sales % Change | 7.6% | (1.8)% | 3.5% | (2.6)% | | Gross Profit Rate % | 21.8% | 23.9% | 21.9% | 23.4% | | Adjusted SG&A as % of Revenue | 19.3% | 21.4% | 20.3% | 21.5% | | Adjusted Operating Income ($ in millions) | $18 | $17 | $22 | $25 | | Adjusted Operating Income as % of Revenue | 2.4% | 2.6% | 1.6% | 1.9% | - International revenue growth was primarily driven by **7.6% comparable sales growth** and revenue from Best Buy Express stores opened in Canada after Q2 FY25[9](index=9&type=chunk) - The decline in international gross profit rate was mainly due to lower product margin rates[10](index=10&type=chunk) [Revenue Mix and Comparable Sales by Category](index=9&type=section&id=Revenue%20Mix%20and%20Comparable%20Sales%20by%20Category) In Q2 FY26, both domestic and international segments saw significant comparable sales growth in computing, mobile phones, and entertainment, with entertainment showing particularly strong performance, while consumer electronics and appliances generally faced declines | Category | Domestic Revenue Mix (Q2 FY26) | Domestic Comparable Sales Change (Q2 FY26) | International Revenue Mix (Q2 FY26) | International Comparable Sales Change (Q2 FY26) | | :-------------------- | :----------------------- | :----------------------------- | :----------------------- | :----------------------------- | | Computing and Mobile Phones | 45% | 3.8% | 47% | 9.5% | | Consumer Electronics | 27% | (4.9)% | 27% | 1.3% | | Appliances | 12% | (8.5)% | 11% | (5.7)% | | Entertainment | 8% | 37.5% | 9% | 57.3% | | Services | 7% | (1.0)% | 5% | 2.2% | | Other | 1% | (6.3)% | 1% | 6.5% | | **Total** | **100%** | **1.1%** | **100%** | **7.6%** | [Capital Allocation & Other Financial Items](index=3&type=section&id=Capital%20Allocation%20%26%20Other%20Financial%20Items) The company incurred **$114 million** in restructuring charges in Q2 FY26 to realign resources and returned **$266 million** to shareholders through dividends and share repurchases, with **$300 million** in repurchases projected for FY26 [Restructuring Charges](index=3&type=section&id=Restructuring%20Charges) In Q2 FY26, the company incurred **$114 million** in restructuring charges, primarily for employee termination benefits and asset impairments, aimed at reallocating resources to align with evolving customer behavior and strategic objectives | Metric ($ in millions) | Q2 FY26 | | :------------------- | :------ | | Restructuring Charges | $114 | - Restructuring charges primarily included employee termination benefits and approximately **$40 million** in asset impairments[12](index=12&type=chunk)[13](index=13&type=chunk) - The restructuring aims to reallocate resources to better align with evolving customer behavior and the company's strategic initiatives[13](index=13&type=chunk) [Share Repurchases and Dividends](index=4&type=section&id=Share%20Repurchases%20and%20Dividends) In Q2 FY26, the company returned **$266 million** to shareholders through dividends and share repurchases, with year-to-date returns totaling **$568 million**, and anticipates approximately **$300 million** in share repurchases for FY26, alongside a declared quarterly cash dividend of **$0.95 per share** | Metric ($ in millions) | Q2 FY26 | YTD FY26 | FY26 Expectation | | :------------------- | :------ | :------- | :-------- | | Dividends | $201 | $403 | - | | Share Repurchases | $65 | $165 | ~$300 | | **Total Shareholder Returns** | **$266** | **$568** | - | - The Board of Directors declared a quarterly cash dividend of **$0.95 per share**, payable on October 9, 2025, to shareholders of record as of September 18, 2025[15](index=15&type=chunk) [Financial Guidance & Outlook](index=3&type=section&id=Financial%20Guidance%20%26%20Outlook) The company reaffirmed its FY26 financial guidance, expecting revenue between **$41.1 billion** and **$41.9 billion** and adjusted diluted EPS between **$6.15** and **$6.30**, with Q3 comparable sales growth projected to be similar to Q2 [FY26 Financial Guidance](index=3&type=section&id=FY26%20Financial%20Guidance) The company reaffirmed its full-year FY26 financial guidance, projecting revenue between **$41.1 billion** and **$41.9 billion**, adjusted diluted EPS between **$6.15** and **$6.30**, and expects comparable sales to trend towards the upper end of the guidance range | Metric | FY26 Guidance | | :-------------------------- | :---------- | | Revenue | $41.1B - $41.9B | | Comparable Sales | (1.0%) - 1.0% | | Adjusted Operating Income Rate | ~ 4.2% | | Adjusted Effective Income Tax Rate | ~ 25.0% | | Adjusted Diluted EPS | $6.15 - $6.30 | | Capital Expenditures | ~ $700M | - The company currently believes sales are trending towards the upper end of its annual guidance range[4](index=4&type=chunk) [Q3 FY26 Outlook](index=1&type=section&id=Q3%20FY26%20Outlook) The company anticipates Q3 FY26 comparable sales growth to be similar to Q2, with an adjusted operating income rate consistent with last year's Q3 at **3.7%** - Q3 FY26 outlook projects comparable sales growth similar to Q2 and an adjusted operating income rate consistent with last year's Q3 at **3.7%**[3](index=3&type=chunk) [Non-GAAP Financial Measures Reconciliation](index=11&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) The company provides GAAP to non-GAAP financial measure reconciliations, adjusting for items like restructuring charges and intangible asset amortization to offer a clearer view of underlying performance [Non-GAAP Financial Measures Reconciliation](index=11&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) The company provides reconciliation tables between GAAP and non-GAAP financial measures to aid investor evaluation, with non-GAAP adjustments typically including restructuring charges, intangible asset amortization, and gains/losses on subsidiary disposals | Metric ($ in millions, except per share) | GAAP Q2 FY26 | Adjustments Q2 FY26 | Adjusted Q2 FY26 | GAAP YTD FY26 | Adjustments YTD FY26 | Adjusted YTD FY26 | | :------------------------------------- | :----------- | :------------- | :------------- | :------------ | :-------------- | :-------------- | | SG&A | $1,829 | $(4) | $1,825 | $3,550 | $(9) | $3,541 | | SG&A as % of Revenue | 19.4% | - | 19.3% | 19.5% | - | 19.5% | | Operating Income | $251 | $118 | $369 | $470 | $232 | $702 | | Operating Income as % of Revenue | 2.7% | - | 3.9% | 2.6% | - | 3.9% | | Effective Tax Rate | 26.8% | 1.0% | 27.8% | 18.3% | 9.1% | 27.4% | | Diluted EPS | $0.87 | $0.41 | $1.28 | $1.82 | $0.61 | $2.43 | - Non-GAAP adjustments primarily include non-cash amortization of intangible assets, restructuring charges related to workforce and store optimization and Best Buy Health business restructuring, and losses on the disposal of a component of the Best Buy Health business[32](index=32&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) [Additional Information & Disclosures](index=4&type=section&id=Additional%20Information%20%26%20Disclosures) The company clarifies comparable sales methodology and forward-looking non-GAAP reconciliation limitations, while also providing a comprehensive disclaimer for forward-looking statements and investor contact details [Notes on Financial Reporting](index=4&type=section&id=Notes%20on%20Financial%20Reporting) The company clarifies its comparable sales calculation methodology and explains the limitations of providing forward-looking non-GAAP financial measure reconciliations due to inherent difficulties in forecasting adjustments - Comparable sales calculation methodologies vary across the retail industry, and the company's approach may differ from other retailers[17](index=17&type=chunk) - The company cannot provide a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures without unreasonable effort, due to the inherent difficulty in forecasting the occurrence, financial impact, and timing of non-GAAP adjustments[18](index=18&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This press release contains forward-looking statements regarding future market conditions, company performance, and financial results, which are based on current views and estimates, subject to risks and uncertainties that could cause actual results to differ materially - Forward-looking statements involve current views and estimates regarding future market conditions, company performance, financial results, operational investments, business prospects, operating models, new strategies, growth initiatives, competitive environment, consumer behavior, and other events[19](index=19&type=chunk) - Factors that could cause actual results to differ materially include macroeconomic pressures (e.g., recession, inflation, currency fluctuations, tariffs), catastrophic events, health crises, technological advancements, competition, ability to attract and retain qualified employees, reliance on key vendors, IT system risks, cyberattacks, product safety and quality issues, changes in laws and regulations, and failure to achieve financial performance guidance[19](index=19&type=chunk) [Investor Relations](index=5&type=section&id=Investor%20Relations) Contact information for investor and media relations is provided - Investor Contact: Mollie O'Brien (mollie.obrien@bestbuy.com) Media Contact: Carly Charlson (carly.charlson@bestbuy.com)[20](index=20&type=chunk)[21](index=21&type=chunk)

Core Viewpoint - Analysts project that Best Buy (BBY) will report quarterly earnings of $1.22 per share, reflecting a 9% decline year over year, with revenues expected to reach $9.21 billion, a decrease of 0.9% from the same quarter last year [1] Revenue Projections - Revenue by Product Category - Domestic - Computing and Mobile Phones is estimated at $3.70 billion, indicating a year-over-year decline of 2.4% [4] - Revenue by Product Category - Domestic - Consumer Electronics is projected to reach $2.49 billion, showing a slight increase of 0.5% year over year [4] - Revenue by Product Category - Domestic - Appliances is expected to be $1.14 billion, reflecting a decline of 3.5% year over year [5] - Revenue by Product Category - Domestic - Entertainment is forecasted at $510.10 million, indicating a year-over-year increase of 2.4% [5] - Geographic Revenue - Domestic is projected to be $8.53 billion, a decrease of 1% year over year [5] - Geographic Revenue - International is estimated at $661.22 million, suggesting a decline of 0.6% year over year [6] Store Metrics - The total number of Domestic stores is expected to be 949, down from 959 in the same quarter last year [6] - The number of Domestic Best Buy stores is projected to reach 883, compared to 890 in the same quarter of the previous year [7] - The number of Domestic Pacific Sales stores is estimated to remain at 20, unchanged from the previous year [7] - The number of International Canada Best Buy stores is expected to be 128, down from 129 in the same quarter last year [8] - The number of International Canada Best Buy Mobile Stand-Alone stores is projected to be 29, down from 32 in the previous year [8] - The average prediction for the total number of International stores is 157, compared to 161 in the same quarter last year [9] Market Performance - Best Buy shares have shown a return of +11.8% over the past month, outperforming the Zacks S&P 500 composite's +2.7% change [9]

Core Viewpoint - Best Buy (BBY.US) is under significant pressure to maintain profitability amid increasing market competition and changing consumer preferences, with investors closely monitoring its financial performance and strategic adjustments ahead of its Q2 2025 earnings report [1] Group 1: Financial Performance Expectations - Market expectations for Best Buy's Q2 revenue are $9.231 billion, a year-over-year decline of 0.6%, with same-store sales expected to decrease by 0.5% and earnings per share (EPS) projected at $1.20, down 10.2% year-over-year [1] - JPMorgan forecasts that Best Buy's same-store sales will decline approximately 0.6%, aligning with market expectations, but anticipates EPS to reach $1.26, exceeding consensus due to effective cost management [2][3] - Wedbush predicts that Best Buy could achieve an EPS as high as $1.27, driven by positive consumer trends and increasing store and online traffic, despite overall challenges in electronic product demand [4] Group 2: Strategic Insights and Market Dynamics - Analysts highlight that strong sales of computing devices and positive consumer response to the new Nintendo Switch model are key drivers for quarterly sales growth, offsetting declines in TV and appliance sales due to a sluggish real estate market [2] - JPMorgan emphasizes that the sentiment towards Best Buy remains "negative to indifferent," creating an entry opportunity as the stock has not rebounded like other mid-cap stocks [3] - Best Buy is expected to maintain its guidance for the second half of 2025, with a long-term optimistic outlook predicting a 2.9% growth in same-store sales and an increase in operating margin to 4.7% by 2027 [3] Group 3: Cost Management and Profitability - Analysts note that while Best Buy faces pressures from tariffs and rising prices, the impact on demand has not been significantly negative, as consumers struggle to differentiate between price changes due to tariffs and those from technological upgrades [2] - Best Buy's gross margin is expected to remain stable at 23.5% year-over-year, with SG&A expenses anticipated to show a 45 basis point deleveraging effect due to non-repeating legal settlement gains and reduced medical claims [5] - The average discount rate for the second quarter is projected at 13%, indicating a continued reliance on promotions within the appliance and consumer electronics sectors [5]

Core Viewpoint - Best Buy (BBY.US) is under significant pressure to maintain profitability amid increasing market competition and changing consumer preferences, with investors closely monitoring its financial performance and strategic adjustments as it prepares to release its Q2 FY2025 earnings report on August 28 [1] Group 1: Financial Performance Expectations - Market consensus anticipates Best Buy's Q2 revenue to be $9.231 billion, a year-over-year decline of 0.6%, with same-store sales expected to decrease by 0.5% and earnings per share (EPS) projected at $1.20, down 10.2% year-over-year [1] - JPMorgan forecasts that Best Buy's Q2 same-store sales will decline approximately 0.6%, aligning with market expectations, but predicts EPS could reach $1.26, exceeding consensus due to effective cost management [2] - Wedbush analysts predict Best Buy could achieve an EPS as high as $1.27, driven by positive consumer trends and increasing store and online traffic, despite overall challenges in electronic product demand [4] Group 2: Strategic Insights and Market Dynamics - Analysts note that strong sales in computing devices and positive consumer response to the upcoming Nintendo Switch model are key drivers for quarterly sales growth, offsetting declines in TV and appliance sales due to a sluggish real estate market [2] - JPMorgan emphasizes that the market sentiment towards Best Buy remains "negative to indifferent," creating a potential entry opportunity for investors as the stock has not rebounded like other mid-cap stocks [3] - Best Buy is expected to maintain its guidance for the second half of FY2025, with analysts suggesting that the path to a 5% operating margin is "very credible," contingent on the recovery of key categories like home theater [3] Group 3: Cost Management and Profitability - Analysts from Bank of America predict a gross margin of 23.5% for Q2, consistent with the previous year, as Best Buy has completed staff reductions in its Geek Squad division, which should alleviate profit pressure from slow adoption of home healthcare solutions [4] - Best Buy's SG&A expenses are expected to show a 45 basis point deleveraging effect, primarily due to the non-recurrence of a $20 million legal settlement and reduced medical claims expenses [5] - The company continues to rely heavily on promotions, with an average discount rate of 13% in Q2, but anticipates that expanding its platform business to approximately 500 suppliers and growth in retail media will contribute to incremental profits and improved margins in FY2026 [5]

Core Viewpoint - Best Buy (BBY.US) is under significant pressure to maintain profitability amid increasing market competition and changing consumer preferences, with a focus on its upcoming Q2 2025 financial results [1] Financial Performance Expectations - Market consensus anticipates Q2 revenue of $92.31 billion, a year-over-year decline of 0.6%, with same-store sales down 0.5% and earnings per share (EPS) at $1.20, reflecting a 10.2% decrease [1] - JPMorgan forecasts that Best Buy's Q2 same-store sales will decline approximately 0.6%, aligning with market expectations, but predicts EPS could reach $1.26, exceeding consensus due to effective cost management [2] - Wedbush analysts project EPS could be as high as $1.27, driven by positive consumer trends and increasing store and online traffic, despite ongoing challenges in overall electronic demand [4] Strategic Insights - Analysts highlight that strong sales in computing devices and positive market response to the new Nintendo Switch model are key growth drivers, offsetting declines in TV and appliance sales due to a sluggish real estate market [2] - JPMorgan emphasizes the potential for Best Buy to maintain its guidance for the second half of 2025, while also noting the need to monitor any strategic adjustments related to consumer demand risks [3] Market Sentiment and Future Outlook - Despite a generally negative market sentiment towards Best Buy, JPMorgan views the current stock price as a good risk-reward opportunity, placing it on a "positive catalyst watch list" since early June [3] - JPMorgan's optimistic long-term forecast for fiscal year 2027 includes a projected 2.9% growth in same-store sales and an increase in operating margin to 4.7%, with a credible path towards a 5% margin if key categories recover [3] Cost Management and Profitability - Analysts note that while Best Buy faces pressures from tariffs and rising costs, the company has adjusted its annual expectations and is working closely with suppliers to mitigate these impacts [4][5] - The average discount rate for the second quarter is expected to be around 13%, indicating a continued reliance on promotions in the appliance and consumer electronics sectors [5]

Group 1: Nvidia Earnings and Market Position - Nvidia is expected to report $1.00 in EPS on $46.03 billion in revenues, reflecting year-over-year increases of +47.1% and +53.2% respectively [4] - Nvidia has established itself as a leader in the AI ecosystem, with its chips being essential for running AI models, making it difficult for competitors to match its offerings [2] - Despite earlier struggles in the year, Nvidia's stock performance has rebounded, showing strong year-to-date performance compared to the S&P 500 and other tech indices [3] Group 2: Broader Market Earnings Trends - Q2 earnings for S&P 500 members are currently up +11.1% on +5.7% higher revenues, with Nvidia's results being a significant highlight for the week [8] - The retail sector is also under focus, with notable companies like Best Buy, Dollar General, and Ulta Beauty reporting results [11] - Total Q2 earnings for 27 retailers in the S&P 500 that have reported are up +12.9% from the same period last year on +6.6% higher revenues, with 74.1% beating EPS estimates [13][16] Group 3: Earnings Estimates and Future Outlook - Combining actuals from 477 S&P 500 members with estimates for upcoming companies, earnings are expected to rise +12.1% year-over-year on +6.1% higher revenues [26] - Current earnings expectations for Q3 2025 indicate a +4.8% increase from the same period last year on +5.5% higher revenues [28] - Estimates have increased for five of the 16 Zacks sectors, including Tech, Finance, Energy, Retail, and Conglomerates, while remaining under pressure for the other sectors [31]

As consumer electronics retailers navigate a shifting landscape marked by evolving technology and changing consumer habits, Best Buy BBY finds itself at a pivotal juncture. Analysts closely watch how the company adapts to these dynamics, with strategic moves and new product offerings potentially reshaping its future trajectory.Telsey Advisory Group analyst Joseph Feldman maintained Best Buy with an Outperform and a $90 price forecast.Feldman states the company’s results are stabilizing and positioned to ret ...