Best Buy(BBY) - 2026 Q1 - Quarterly Report

Revenue Performance - Total revenue for the first quarter of fiscal 2026 was $8.8 billion, a decrease of 0.9$8.8 billion in the same period last year[77]. - Comparable sales declined by 0.7% in the first quarter of fiscal 2026, with declines in home theater, appliances, and drones, while growth was seen in computing, mobile phone, and tablet categories[78]. - Domestic segment revenue was $8.13 billion, a decline of 0.9$640 million, with a comparable sales decline of 0.7%[91]. - Foreign currency exchange rate fluctuations negatively impacted revenue by approximately $29 million in the first quarter of fiscal 2026, primarily due to the strength of the U.S. dollar against the Canadian dollar[127]. Profitability Metrics - Gross profit for the first quarter of fiscal 2026 was$2.05 billion, representing 23.4% of revenue, compared to 23.3% in the prior year[77]. - Operating income decreased to $219 million, with an operating income margin of 2.5$0.95, a decrease from $1.13 in the prior year[77]. - International segment gross profit decreased to 22.0$333 million, unchanged from the previous year, representing 3.8% of revenue[97]. Expenses and Charges - Restructuring charges in the first quarter of fiscal 2026 amounted to 109 million, primarily related to optimizing the Best Buy Health business[79]. - Domestic segment adjusted SG&A decreased, primarily due to a favorable indirect tax settlement[90]. - Cash flows from operating activities decreased to 34 million from $156 million in the previous year[106]. Tax and Financial Position - The effective tax rate decreased to 8.6$1.4 billion in cash, cash equivalents, and restricted cash, with $0.5 billion of debt swapped to floating rate, resulting in a net asset balance exposed to interest rate changes of$0.9 billion[125]. Debt and Credit Facilities - The company entered into a $1.25 billion five-year senior unsecured revolving credit facility agreement, replacing the previous facility[111]. - The company has$1.25 billion in undrawn capacity on its Five-Year Facility Agreement as of May 3, 2025, which could be included in short-term or long-term debt if drawn[117]. Market and Interest Rate Exposure - A 50-basis point increase in short-term interest rates would lead to an estimated $5 million increase in interest income, while a decrease of the same magnitude would result in a$5 million decrease[125]. - The company is exposed to changes in short-term market interest rates, which will impact net interest expense and interest income[124]. Strategic Initiatives - The company plans to reduce its Domestic Best Buy store count by approximately 5 to 10 stores in fiscal 2026[82]. - The company emphasizes the importance of managing strategic ventures, alliances, or acquisitions as part of its growth initiatives[121]. Currency Management - The company utilizes foreign currency forward contracts to manage foreign currency exposure related to certain forecasted inventory purchases and recognized receivable and payable balances[126]. - The estimated impact of foreign exchange rate fluctuations on net earnings in the first quarter of fiscal 2026 was not significant[127]. Other Financial Information - Cash and cash equivalents decreased to $1,147 million from$1,578 million as of February 1, 2025, primarily due to inventory purchases and dividend payments[104]. - Total cost of shares repurchased increased to $100 million in the first quarter of fiscal 2026, with an average price per share of$64.39[115]. - There have been no significant changes in the company's significant accounting policies or critical accounting estimates since the end of fiscal 2025[119]. - The company has not experienced any material changes in contractual obligations since the end of fiscal 2025[118].