Best Buy(US:BBY) Zhi Tong Cai Jing·2025-08-25 08:29Core 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]