Best Buy's Q2 Earnings Beat, Enterprise Comparable Sales Up 1.6% Y/Y

Core Insights - Best Buy Co., Inc. (BBY) reported second-quarter fiscal 2026 results with revenues and earnings exceeding the Zacks Consensus Estimate, and revenues increased year over year [1] Financial Performance - Adjusted earnings were $1.28 per share, surpassing the Zacks Consensus Estimate of $1.22, but down from $1.34 per share in the prior year [3] - Enterprise revenues reached $9,438 million, exceeding the consensus mark of $9,202 million and increasing by 1.6% from $9,288 million in the previous year [3] - Gross profit rose 0.4% to $2,194 million, while gross margin decreased by 30 basis points to 23.2% [4] - Adjusted operating income was $369 million, down 3.1% from the previous year, with an adjusted operating margin of 3.9%, a decline of 20 basis points [4] Domestic Operations - Domestic revenues were $8,698 million, a 0.9% increase year over year, driven by a 1.1% rise in comparable sales [6] - Domestic online revenues increased by 5.1% to $2.86 billion, accounting for 32.8% of total domestic revenues, up from 31.5% last year [7] - Domestic gross margin fell 10 basis points to 23.4%, primarily due to lower product margin rates [8] International Operations - International revenues increased by 11.3% to $740 million, supported by a 7.6% rise in comparable sales and new Best Buy Express locations in Canada [9] - International gross margin contracted by 210 basis points to 21.8%, mainly due to lower product margin rates [10] Shareholder Returns - During the quarter, the company returned $266 million to shareholders, including $201 million in dividends and $65 million in share repurchases [13] - The board authorized a quarterly cash dividend of 95 cents per share, payable on October 9, 2025 [14] Future Guidance - For the fiscal third quarter, Best Buy expects comparable sales growth to remain similar to the reported quarter, with an adjusted operating margin similar to the previous year's 3.7% [15] - The company maintains its fiscal 2026 revenue guidance between $41.1 billion and $41.9 billion, with comparable sales expected to range from down 1% to up 1% [16] - Adjusted earnings per share are projected to be between $6.15 and $6.30, with capital expenditures estimated at around $700 million for the fiscal year [17]