Best Buy Co., Inc. (BBY) Earnings & Analysis

Latest quarter

Best Buy reported Q2 FY2027 revenue of $9.8 billion, compared with the consensus of $9.6 billion. The company reported adjusted EPS, as the consensus counts it, of $1.47, compared with consensus adjusted EPS of $1.37.

The filing shows revenue rose 3.61% from $9.4 billion in Q2 FY2026, while diluted EPS increased 70.1% from $0.87 to $1.48. Best Buy said comparable-sales growth was driven by computing, home theater, AI glasses and trading cards, partly offset by a decline in traditional gaming. The filing reports gross margin of 23.9%, compared with 23.2% a year earlier, and operating margin of 4.31%, compared with 2.66%. Best Buy attributed the operating-income-rate increase primarily to lower restructuring charges and favorable gross profit rates. The company reported free cash flow of $737.0 million, compared with $574.0 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

On demand, Corie Barry said customers remained value-focused and responsive to sales events, while still willing to spend on higher-priced products when they needed them or when technology innovation was involved. Barry said August comparable-sales growth was at the high end of the company’s 1% to 3% second-half range at that point, supported by its anniversary sale and back-to-school volume.

Jason Bonfig said the company expects phones, TVs and emerging categories to continue growing in the second half, alongside continued improvement in appliance sales trends. He said computing growth is expected to slow as the company laps prior growth and the end of support for the Windows 10 operating system. Bonfig said computing product costs and prices had risen, with the company focusing on product selection, trade-in, financing and vendor promotions to address customer budgets. In response to questions about pricing, Barry said the company would not provide ASP guidance.

On margins, Barry said Q2’s adjusted operating-income rate benefited from a higher gross profit rate, including tariff refunds, while higher incentive compensation partly offset that benefit. She said the company expects ads and marketplace to support gross-profit-rate expansion, while it continues investments in major appliances and customer experiences. Bonfig said the company’s teams are focused on revenue, share and rate rather than treating those objectives as alternatives.

When asked about competition and promotions, Bonfig said Best Buy’s categories have long been competitive and that promotional activity was in line with the company’s expectations. He said the company aims to differentiate its offering through assortment, service, support and membership, alongside marketplace and ads.

Bonfig said the company continues to manage inventory closely and may bring computing inventory forward when it has visibility that prices will rise. He said memory-price effects were concentrated in computing and were not expected to materially affect other categories through the rest of the year. Barry said Best Buy incorporated higher fuel costs into its updated outlook and expects supply chain to be relatively neutral to gross profit rate for the full year.

Guidance

Best Buy raised its FY2027 revenue outlook to $42.3 billion to $42.8 billion from prior guidance of $41.2 billion to $42.1 billion. The company raised its FY2027 adjusted operating income rate outlook to 4.40% to 4.50% from 4.3% to 4.4%. Best Buy raised its FY2027 adjusted diluted EPS outlook to $6.70 to $6.90 from $6.30 to $6.60.