Best Buy(BBY) - 2026 Q2 - Quarterly Results

Executive Summary & Highlights 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 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 | $1.34 | -4.5% | Management Commentary & Outlook CEO Corie Barry attributes Q2 sales growth to new tech innovation and strong partnerships, while CFO Matt Bilunas anticipates similar Q3 comparable sales growth and reaffirmed FY26 guidance towards the upper end of the range - Q2 sales growth was primarily driven by new technology innovation, seamless omnichannel customer experience, and strong vendor partnerships[3] - The company anticipates more tech innovation, new store experiences, and the launch of Best Buy Marketplace in the second half of the year[3] - Q3 FY26 outlook projects comparable sales growth similar to Q2 and an adjusted operating income rate consistent with last year's Q3 at 3.7%[3] Consolidated Financial Performance The company reported a 1.6% revenue increase in Q2 FY26, but net earnings and diluted EPS declined due to restructuring, while total assets slightly decreased and cash flow from operations saw a minor reduction Consolidated Statements of Earnings In Q2 FY26, revenue increased by 1.6% year-over-year, but net earnings and diluted EPS declined due to restructuring charges and a lower operating income rate, with similar trends for the year-to-date period | Metric ($ 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 | $2.47 | Consolidated Balance Sheets As of August 2, 2025, total assets slightly decreased primarily due to reduced goodwill, while current assets increased and total liabilities remained relatively stable, leading to a decrease in equity | Metric ($ 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 | $15,624 | Consolidated Statements of Cash Flows For the six months ended August 2, 2025, cash flow from operations slightly decreased, cash used in investing activities increased for property and equipment, and cash used in financing activities also rose due to share repurchases and dividends, resulting in a lower period-end cash balance | Metric ($ 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 | $1,698 | Segment Performance Domestic revenue increased by 0.9% driven by computing and mobile phones, while international revenue grew by 11.3% with strong comparable sales, though both segments experienced product margin rate declines Domestic Segment Results Domestic revenue grew by 0.9% driven by comparable sales increases in gaming, computing, and mobile phones, but partially offset by declines in other categories, while gross profit rate slightly decreased and adjusted SG&A as a percentage of revenue remained flat | Metric | Q2 FY26 | Q2 FY25 | YTD FY26 | YTD FY25 | | :-------------------------------- | :------ | :------ | :------- | :------- | | Revenue ($ 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 | $689 | | Adjusted Operating Income as % of Revenue | 4.0% | 4.2% | 4.0% | 4.1% | - Domestic comparable sales growth was primarily driven by gaming, computing, and mobile phones, partially offset by declines in home theater, appliances, tablets, and drones[5] - The decline in domestic gross profit rate was mainly due to lower product margin rates, partially offset by improved services margin rates, with product margin rate decline driven by an increased mix of lower-margin categories[7] - Increased domestic adjusted SG&A expenses were primarily due to higher compensation costs (including medical claims), the absence of a favorable legal settlement from the prior year, and technology investments, partially offset by reduced Best Buy Health expenses[8] International Segment Results International revenue increased by 11.3% due to 7.6% comparable sales growth and contributions from new Best Buy Express stores in Canada, despite a decline in gross profit rate primarily from lower product margins, while adjusted SG&A as a percentage of revenue improved | Metric | Q2 FY26 | Q2 FY25 | YTD FY26 | YTD FY25 | | :-------------------------------- | :------ | :------ | :------- | :------- | | Revenue ($ 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] - The decline in international gross profit rate was mainly due to lower product margin rates[10] Revenue Mix and Comparable Sales by Category 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 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 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][13] - The restructuring aims to reallocate resources to better align with evolving customer behavior and the company's strategic initiatives[13] Share Repurchases and Dividends 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] Financial Guidance & Outlook 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 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 | ~ $700M | - The company currently believes sales are trending towards the upper end of its annual guidance range[4] Q3 FY26 Outlook The company anticipates Q3 FY26 comparable sales growth to be similar to Q2, with an adjusted operating income rate consistent with last year's Q3 at 3.7% - Q3 FY26 outlook projects comparable sales growth similar to Q2 and an adjusted operating income rate consistent with last year's Q3 at 3.7%[3] Non-GAAP Financial Measures Reconciliation The company provides GAAP to non-GAAP financial measure reconciliations, adjusting for items like restructuring charges and intangible asset amortization to offer a clearer view of underlying performance Non-GAAP Financial Measures Reconciliation The company provides reconciliation tables between GAAP and non-GAAP financial measures to aid investor evaluation, with non-GAAP adjustments typically including restructuring charges, intangible asset amortization, and gains/losses on subsidiary disposals | Metric ($ 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][34][35][36] Additional Information & Disclosures 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 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] - 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] Forward-Looking Statements 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] - 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] Investor Relations 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][21]