stockrowWhat it does
Best Buy is a consumer-technology retailer founded in 1966 and headquartered in Richfield. It sells technology products and related services to people shopping online, in stores, or through delivery and in-home visits across the U.S. and Canada.
Its merchandise spans computing and mobile phones, consumer electronics, appliances, entertainment products, and other goods such as baby, food and beverage, and outdoor-living products. Computing includes desktops, notebooks, peripherals, tablets, networking equipment and wearables. Consumer electronics include televisions, home theater equipment, headphones, portable speakers, digital imaging, smart-home, health and fitness products. Entertainment includes gaming hardware, software and peripherals, drones, toys, virtual-reality products and augmented-reality glasses.
The company also sells services alongside products. These include advertising, delivery, installation, repair, setup, technical support, warranty-related services, memberships, health-related services and marketplace commissions. Geek Squad is part of its service offering, while Best Buy Health is included in its Domestic segment.
Both operating segments use an omnichannel model: customers can browse or buy digitally, visit stores, arrange delivery, pick up products at stores or alternative locations, and invite service teams into their homes. Online orders can be fulfilled through delivery, store pickup, curbside pickup at many stores, or ship-from-store. Management said on the call that AskBlue, a conversational shopping and support assistant, is being introduced in phases, and that customers can complete Best Buy purchases directly within ChatGPT.
How it makes money
Best Buy earns most of its revenue by retailing consumer technology and appliances. It buys merchandise from vendors, offers it through digital and physical channels, and sells related delivery, installation, technical-support and warranty services. Product pricing and promotions, procurement, supply chain, online and mobile operations, marketing, advertising and labor deployment are centrally managed.
The company has two reportable segments. Domestic covers all U.S. states, districts and territories as well as Best Buy Health. International covers Canadian operations. Both offer the same broad revenue categories: computing and mobile phones; consumer electronics; appliances; entertainment; services; and other products. Services include marketplace commissions and advertising, creating revenue streams beyond direct merchandise sales.
Best Buy Ads is its retail-media network. Best Buy Marketplace allows third-party sellers to offer additional products, and the company expects it to create commission and advertising revenue without requiring inventory investment. Memberships can provide recurring fees and benefits including shipping, extended returns, exclusive prices, protection and support. Management said on the call that My Best Buy Plus and Total members earn rewards on eligible purchases, while Total members receive product protection and 24-7 support.
FY2026 segment revenue: Domestic $38.3 billion; International $3.4 billion. Q2 FY2027 enterprise revenue: $9.8 billion.
Management said on the call that Best Buy Ads collected $900 million in the prior year and was on track for 10% growth during FY2027. Management also said domestic marketplace GMV reached approximately 300 million in Q2 and was expected to reach 1.3 billion GMV for the full year.
| Segment | Revenue, FY2026 | Share | Change on the year |
|---|---|---|---|
| Domestic | $38.3 billion | 91.8% | 0.10% |
| International | $3.4 billion | 8.19% | 3.74% |
Customers and how it sells
Best Buy serves customers buying, replacing, upgrading, installing or supporting consumer technology and appliances. Its channels are designed for customers who want to shop digitally, in a store, use pickup, have products delivered, or use in-home services. Management said on the call that customers remain value-focused and responsive to sales events, while still buying higher-priced products when they need them or when there is technology innovation.
The Domestic segment accounts for $38.3 billion, or 91.8%, of FY2026 revenue, and consists of U.S. operations and Best Buy Health. The International segment consists of Canadian operations and produced $3.4 billion, or 8.19%, of FY2026 revenue. Best Buy had 1,068 stores across these segments at the end of FY2026.
Physical stores are also fulfillment points for online orders. Customers can receive delivery, pick up in stores, use curbside pickup at many stores, or select alternative pickup locations. Ship-from-store expands delivery options. Management said on the call that smaller-format stores are intended for markets that cannot support a traditional Best Buy store and that large-format stores are being repurposed for vendor spaces and outlet experiences.
Best Buy for Business generates more than $1.1 billion annually, according to management on the call. In Q2 FY2027, online revenue was $3 billion, represented 33.1% of domestic revenue, and increased 5.1% on a comparable basis.
| Region | Revenue, FY2026 | Share | Change on the year |
|---|---|---|---|
| U.S. | $38.3 billion | 91.8% | 0.10% |
| Canada | $3.4 billion | 8.19% | 3.74% |
Suppliers and costs
Best Buy purchases merchandise from a variety of suppliers, with most merchandise shipped directly from manufacturers to its distribution centers. Its 20 largest suppliers represented approximately 80% of FY2026 merchandise purchases. Apple, Samsung, HP, LG and Sony together represented approximately 55% of total merchandise purchased. The company generally does not have long-term written vendor contracts that require continued supply or lock in key commercial terms.
Best Buy operates a global sourcing organization for exclusive-brand products that designs, develops, tests and contract-manufactures those products. It manages inventory through demand and product-life-cycle monitoring, adjustments to receipts and pricing, vendor reimbursement arrangements for markdowns or sales incentives, and return privileges for certain products.
Costs include merchandise procurement, supply chain and distribution, store and in-home labor, marketing, advertising, technology, rent and support functions. Management said on the call that industry-wide memory-cost increases raised computing product costs and prices, while higher fuel costs were included in FY2027 guidance. Supply-chain results were expected to be relatively neutral to gross profit rate for the full year.
- Revenue$41.7B
- Cost of revenue−$32.3B
- Selling, general and administrative−$7.6B
- Other operating costs−$361.0M
- Operating income$1.4B
Competitive position
Best Buy competes with multi-channel retailers, e-commerce businesses, technology service providers, traditional store-based retailers, vendors and mobile-network carriers that sell products and services directly to customers. Some competitors operate with lower costs and compete primarily on price. Best Buy monitors competitors’ prices and uses price-matching policies for qualifying prices offered by certain stores and online operators.
No individual competing company is named in the available evidence. Apple, Samsung, HP, LG and Sony are named as major suppliers, not as competitors.
Best Buy identifies its integrated online, store and in-home assets; knowledgeable employees; curated assortment; vendor partnerships; service and support; distinct store formats; and supply chain as competitive advantages. It also uses stores as locations to showcase products, support vendor store-within-a-store concepts, fulfill online orders and provide pickup. Management said on the call that next-day appliance availability had been expanded to almost all metro delivery locations, and that 50 dedicated Meta spaces were being implemented in stores.
Our reading: The omnichannel network is a meaningful moat because it combines product discovery, immediate pickup, delivery and in-home support, though it must remain price competitive against lower-cost and online rivals. [item1; item1a]
Our reading: Vendor relationships and dedicated physical selling space support product launches and demonstrations, but supplier concentration gives major vendors considerable importance in the merchandise offer. [item1; call_prepared]
Our reading: Advertising, marketplace and memberships broaden the business beyond retail product margin, but these initiatives are still being expanded and require technology, marketing and staffing investment. [item7; call_prepared]
Growth opportunities
Best Buy’s strategy is to strengthen its retail position as an omnichannel technology destination while scaling newer profit streams. Its FY2027 priorities include improving digital and store experiences, growing Best Buy Ads and Best Buy Marketplace, and finding cost reductions and efficiencies to fund investments and offset business pressures.
Digital initiatives include customer recognition and personalization, more use of the Best Buy App, higher digital conversion in major appliances and home theater, AI-based shopping tools and integrations with platform providers. Management said on the call that AskBlue is being rolled out in phases and that Best Buy completed a commerce integration with OpenAI to support product discovery, recommendations and purchases within ChatGPT.
Marketplace growth adds third-party sellers and assortment without requiring Best Buy to own the inventory. Management said on the call that the company expected marketplace GMV of 1.3 billion for FY2027 and planned to begin adding international sellers later in Q2. Management also said Best Buy Ads was on track for 10% growth on top of $900 million in prior-year collections.
Other growth efforts include smaller-format stores, vendor spaces in large-format stores, outlet experiences, membership-program updates and emerging categories such as AI glasses, trading cards and health rings. Management said on the call it expected paid members to grow from just over 8 million in February to approximately 9 million by year-end. It also raised FY2027 guidance to revenue of $42.3 to $42.8 billion, comparable-sales growth of 1.9 to 3%, and adjusted operating income rate of 4.4 to 4.5%.
- $51.8BFY2022
- $46.3BFY2023
- $43.5BFY2024
- $41.5BFY2025
- $41.7BFY2026
- $42.3BFY2027 guidance
Structural risks
-
Macroeconomic pressure can affect whether customers buy, upgrade or replace devices, choose higher or lower price points, and purchase complementary services such as memberships.
-
Technology changes and changing consumer preferences can be hard to predict and manage. A failure to react can lead to inadequate product supply, excess inventory, heavy discounting, storage costs, or delays in merchandising, marketing and supply-chain changes.
-
Competition from multi-channel retailers, e-commerce businesses, technology service providers, store-based retailers, vendors and mobile-network carriers directly affects revenue and profitability. Lower-cost competitors can compete principally on price.
-
The business depends on vendors and imported products. The five largest suppliers represented approximately 55% of merchandise purchased in FY2026, and Best Buy generally lacks long-term written supply agreements. Its supply chain also depends heavily on vendor imports.
-
Service offerings face risks including warranty failure rates, margin pressure from memberships, labor costs, technology-upgrade needs, subcontractor dependence, in-home liability, service errors, device-data privacy and security, and disruptions from weather or safety events.
-
A large proportion of revenue and earnings is generated in the fiscal fourth quarter. Working-capital needs rise before the holiday period as the company purchases inventory ahead of expected sales.
Bottom line
Our reading
Our reading: Best Buy is primarily a U.S. consumer-technology retailer whose sales model combines stores, online ordering, delivery, pickup and in-home services; Canada is a smaller second segment. [item1; segment.domestic.share.fy2026; segment.international.share.fy2026]
Our reading: Its economics remain exposed to discretionary technology demand, price competition, vendor concentration and a holiday-weighted sales calendar, while ads, marketplace and memberships are intended to add revenue streams beyond product retailing. [item1; item1a; item7]
Our reading: The company is investing in digital shopping, fulfillment, store formats and vendor-led experiences while balancing those investments with operating-efficiency efforts. [item7; call_prepared]