Best Buy Co., Inc.
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Item 1. Business.
Unless the context otherwise requires, the terms “we,” “us,” “our” and the “company” in this Annual Report on Form 10-K refer to Best Buy Co., Inc. and, as applicable, its consolidated subsidiaries. Any references to our website addresses do not constitute incorporation by reference of the information contained on the websites.
Description of Business
We were incorporated in the state of Minnesota in 1966. We are driven by our purpose to enrich lives through technology and our vision to personalize and humanize technology solutions for every stage of life. We accomplish this by leveraging our unique combination of tech expertise and a human touch to meet our customers’ everyday needs, whether they come to us online, visit our stores or invite us into their homes. We have operations in the U.S. and Canada.
Segments and Geographic Areas
We have two reportable segments: Domestic and International. The Domestic segment is comprised of our operations in all states, districts and territories of the U.S. and our Best Buy Health business, and includes the brand names Best Buy, Best Buy Ads, Best Buy Business, Best Buy Essentials, Best Buy Health, Best Buy Marketplace, Geek Squad, Imagine That, Insignia, Lively, Jitterbug, My Best Buy, My Best Buy Memberships, Pacific Kitchen and Home, TechLiquidators and Yardbird; and the domain names bestbuy.com, lively.com, techliquidators.com and yardbird.com. Our International segment is comprised of all operations in Canada under the brand names Best Buy, Best Buy Ads, Best Buy Business, Best Buy Express, Best Buy Marketplace, Best Buy Mobile, Geek Squad, Insignia and TechLiquidators and the domain names bestbuy.ca and techliquidators.ca.
Operations
Our Domestic and International segments are managed by leadership teams responsible for all areas of the business. Both segments operate an omnichannel platform that allows customers to come to us online, visit our stores or invite us into their homes.
Development of merchandise and service offerings, pricing and promotions, procurement and supply chain, online and mobile application operations, marketing and advertising and labor deployment across all channels are centrally managed. In addition, support capabilities (for example, human resources, finance, information technology and real estate management) operate primarily from our corporate headquarters. We also have field operations that support retail, services and in-home teams primarily from our corporate headquarters and regional locations. Our retail stores have procedures for inventory management, asset protection, transaction processing, customer relations, store administration, product sales and services, staff training and merchandise display that are largely standardized. All stores generally operate under standard procedures with a degree of flexibility for store management to address certain local market characteristics. While day-to-day operations of our stores are led by store management, more strategic decisions regarding, for example, store locations, format, category assortment and fulfillment strategy, are led by our corporate teams with input from market or regional leadership.
Merchandise and Services
Our Domestic and International segments have offerings in six revenue categories. The key components of each revenue category are as follows:
•Computing and Mobile Phones - computing (including desktops, notebooks and peripherals), mobile phones (including related mobile network carrier commissions), networking, tablets (including e-readers) and wearables (including smartwatches);
•Consumer Electronics - digital imaging, health and fitness products, home theater (including home theater accessories, soundbars and televisions), portable audio (including headphones and portable speakers) and smart home;
•Appliances - large appliances (including dishwashers, laundry, ovens and refrigerators) and small appliances (including blenders, coffee makers, vacuums and personal care);
•Entertainment - drones, gaming (including hardware, peripherals and software, as well as augmented reality glasses), toys, virtual reality and other software;
•Services - advertising, delivery, health-related services, installation, marketplace commissions, memberships, repair, set-up, technical support, warranty-related services; and
•Other - other product offerings, including baby, food and beverage and outdoor living.
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Distribution
Customers within our Domestic segment who purchase product online have the choice to have product delivered, or pick up product from a Best Buy store (including curbside pick-up for many products at most stores) or an alternative pick-up location. Our ship-from-store capability allows us to offer additional fast and convenient delivery options for customers. Most merchandise is shipped directly from manufacturers to our distribution centers. Distribution is similar for our International segment.
Suppliers and Inventory
Our Domestic and International segments purchase merchandise from a variety of suppliers. In fiscal 2026, our 20 largest suppliers accounted for approximately 80% of the merchandise we purchased, with five suppliers – Apple, Samsung, HP, LG and Sony – representing approximately 55% of total merchandise purchased. We generally do not have long-term written contracts with our vendors that would require them to continue supplying us with merchandise or that secure any of the key terms of our arrangements.
We carefully monitor and manage our inventory levels in an effort to match quantities on hand with consumer demand as closely as possible. Key elements to our inventory management process include the following: continuous monitoring of consumer demand and product life cycles, continuous monitoring and adjustment of inventory receipt levels and pricing, agreements with vendors relating to reimbursement for the cost of markdowns or sales incentives, and agreements with vendors relating to return privileges for certain products.
We also have a global sourcing operation to design, develop, test and contract-manufacture our exclusive brands products.
Store Development
We had 1,068 stores at the end of fiscal 2026 throughout our Domestic and International segments. Our stores are a vital component of our omnichannel strategy, and we believe they are an important competitive advantage. We also have vendor store-within-a-store concepts to allow closer vendor partnerships and a higher quality customer experience. We continuously look for opportunities to optimize our store space, renegotiate leases and selectively open or close locations to support our operations.
Intellectual Property
We own or have the right to use valuable intellectual property such as trademarks, service marks and trade names, including, but not limited to, Best Buy, Best Buy Ads, Best Buy Business, Best Buy Essentials, Best Buy Express, Best Buy Health, Best Buy Marketplace, Geek Squad, Imagine That, Insignia, Jitterbug, Lively, Magnolia, My Best Buy, My Best Buy Memberships, Pacific Kitchen and Home, Pacific Sales, Rocketfish, TechLiquidators, Yardbird and our Yellow Tag logo.
We have secured domestic and international trademark and service mark registrations for many of our brands. We have also secured patents for many of our inventions. We believe our intellectual property has significant value and is an important factor in the marketing of our company, our stores, our products and our websites.
Seasonality
Our business, like that of many retailers, is seasonal. A large proportion of our revenue and earnings is generated in the fiscal fourth quarter, which includes the majority of the holiday shopping season.
Working Capital
We fund our business operations through a combination of available cash and cash equivalents and cash flows generated from operations. In addition, our revolving credit facility is available for additional working capital needs, for general corporate purposes, investments and growth opportunities. Our working capital needs typically increase in the months leading up to the holiday shopping season as we purchase inventory in advance of expected sales.
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Competition
Our competitors are primarily multi-channel retailers, e-commerce businesses, technology service providers, traditional store-based retailers, vendors and mobile network carriers who offer their products and services directly to customers. We believe our ability to help customers online, in our stores and in their homes, and to connect technology product and solutions with customer needs, provide us key competitive advantages. Some of our competitors have lower cost operating structures and seek to compete for sales primarily on price. We carefully monitor pricing offered by other retailers and service providers, as maintaining price competitiveness is one of our ongoing priorities. In addition, we have price-matching policies that allow customers to request that we match a price offered by certain retail stores and online operators. In order to allow this, we are focused on maintaining efficient operations and leveraging the economies of scale available to us through our global vendor partnerships. We believe our dedicated and knowledgeable people; our integrated online, retail and in-home assets; our broad and curated product assortment; our strong vendor partnerships; our service and support offerings designed to solve customer needs; our unique ability to showcase technology in distinct store formats; and our supply chain are important ways in which we maintain our competitive advantage.
Corporate Responsibility & Sustainability ("CR&S")
As we pursue our purpose to enrich lives through technology, we are committed to creating shared long-term value and positively impacting the world, the environment and the communities in which we operate through interactions with our stakeholders, including our customers, employees, vendor partners, community partners and shareholders.
The Nominating, Corporate Governance and Public Policy Committee of our Board of Directors (“Board”) advises and oversees management regarding the effectiveness and risks of our CR&S strategy, programs and initiatives, including environmental goals and progress, corporate responsibility programs, initiatives and public policy positions and advocacy.
Environmental
We aspire to drive forward the circular economy, a system that aims to reduce waste and preserve resources. We focus on our highest-impact areas, including our operations, the energy we procure and the products we sell. These efforts contribute to mitigating climate risks, reducing potential risks to our business and generating long-term cost savings.
In our operations, we strive to reduce the use of natural resources. We believe the following focus areas help to reduce the use of natural resources and our impact on the environment while improving our efficiency and profitability:
•We aim to reduce our carbon emissions by minimizing energy usage, advocating for a cleaner grid and sourcing renewable energy.
•We monitor our water consumption across our business to identify and manage programs that lessen our dependence on water.
•To reduce waste and maximize resource efficiency, we continue to develop a more sustainable supply chain by certifying our supply chain locations under the TRUE zero waste program.
Our focus on sustainable products centers on energy efficiency. By assorting and promoting a broad range of energy-efficient electronics and appliances, we help customers reduce their environmental impact and energy costs throughout the life of the product.
We support the circular economy by keeping consumer products in use for as long as possible through our repair and trade-in services. We put materials back into the manufacturing process when products reach the end of their lives through our electronics and appliance recycling program.
Since launching our nationwide e-waste recycling program in 2008, we have continued to expand our industry leading efforts, and in fiscal 2026, we introduced new financial incentives, continued convenient mail-back options and enhanced home haul-away services to make recycling easier and more rewarding.
Human Rights and Responsible Sourcing
We are committed to respecting human rights through our alignment with the United Nations Guiding Principles on Business and Human Rights.
Further, across the products and services we procure, we seek to mitigate risk and enhance our partnership with suppliers and create value for all stakeholders through our Responsible Sourcing Program. We are active members of the Responsible Business Alliance, as are many of the major brands we sell, which allows us to partner across initiatives and increase our impact. Collectively, we embrace a common Supplier Code of Conduct and audit methodology that creates business value by improving working conditions and environmental practices throughout the supply chain.
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Social Impact
We are committed to helping young people build brighter futures by preparing them to enter quality tech-reliant careers of the future. We are refreshing our community commitments to focus on creating economic opportunity for young people as they chart their path from education to employment. This includes working with a community of like-minded employers moving beyond traditional hiring models, valuing skills over credentials to build a dynamic, resilient workforce. Similarly, our employee volunteer programs, like Geek Squad Academy, spark excitement and interest in technology for young learners while engaging our employees’ unique technical expertise.
Best Buy serves as a fiscal sponsor of the Best Buy Foundation™, whose Best Buy Teen Tech Center® program consists of a network of youth-centered community hubs where young people can connect with the latest technology, learn career skills and engage with supportive mentors in safe environments to ensure young people are prepared for the demands of today's economy.
Human Capital Management
We believe in the power of our people. Our culture is built on the belief that engaged and committed employees – supported by opportunities to learn, grow, innovate and explore – can lead to extraordinary outcomes. At the end of fiscal 2026, we employed approximately 82,000 employees in the U.S. and Canada.
Inclusion and Belonging
We believe in a culture of belonging where everyone feels valued, can thrive and has equal opportunities at all levels in the organization. At the core of this inclusive environment are our company values, which were founded decades ago. One of our values – unleash the power of our people – emphasizes that everyone can learn, grow and be the best version of themselves. We believe that creating this environment is the right thing to do and has been key to our long-term business success.
Our Executive Leadership Team and Compensation and Human Resources Committee of our Board supports the development of a culture of belonging and engagement through oversight of our human resources policies and programs. The Nominating, Corporate Governance and Public Policy Committee of our Board recommends criteria for the selection of individuals to be considered as candidates for election to the Board.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Unless the context otherwise requires, the use of the terms “Best Buy,” “we,” “us,” “our” and the “company” refers to Best Buy Co., Inc. and, as applicable, its consolidated subsidiaries. Any references to our website addresses do not constitute incorporation by reference of the information contained on the websites.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Unless otherwise noted, transactions and other factors significantly impacting our financial condition, results of operations and liquidity are discussed in order of magnitude. Our MD&A should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended January 31, 2026 (including the information presented therein under Risk Factors), as well as our other reports on Forms 10-Q and 8-K and other publicly available information. All amounts herein are unaudited.
Overview
We are driven by our purpose to enrich lives through technology and our vision to personalize and humanize technology solutions for every stage of life. We accomplish this by leveraging our combination of tech expertise and a human touch to meet our customers’ everyday needs, whether they come to us online, visit our stores or invite us into their homes.
We have two reportable segments: Domestic and International. The Domestic segment is comprised of our operations in all states, districts and territories of the U.S. and our Best Buy Health business. The International segment is comprised of all our operations in Canada.
Our fiscal year ends on the Saturday nearest the end of January. Unless otherwise noted, references to years within the MD&A section of this report relate to fiscal years, not calendar years. Our business, like that of many retailers, is seasonal. A large proportion of our revenue and earnings is generated in the fiscal fourth quarter, which includes the majority of the holiday shopping season.
Comparable Sales
Throughout this MD&A, we refer to comparable sales. Comparable sales is a metric used by management to evaluate the performance of our existing stores and digital offerings by measuring the change in net sales for a particular period over the comparable prior period of equivalent length.
Comparable sales includes revenue from stores operating for at least 14 full months; sales initiated on a website, app or virtual store; advertising revenue; commercial sales; credit card revenue; gift card breakage; marketplace commission revenue; and sales of merchandise to wholesalers and dealers. Revenue from acquisitions is included in comparable sales beginning with the first full quarter following the first anniversary of the date of the acquisition. Comparable sales excludes revenue from stores closed more than 14 days (including but not limited to relocated, remodeled, expanded and downsized stores, or stores impacted by natural disasters) until at least 14 full months after reopening; the impact of certain periodic warranty-related profit-share revenue; the effect of fluctuations in foreign currency exchange rates (applicable to our International segment only); and the impact of the 53rd week (applicable in 53-week fiscal years only). Comparable sales is based on our fiscal calendar and is not adjusted to align calendar weeks. All periods presented apply this methodology consistently.
Comparable online sales is a subset of comparable sales related to our digital offerings and includes sales initiated on a website, app or virtual store; advertising revenue and marketplace commission revenue.
We believe comparable sales is a meaningful supplemental metric for investors to evaluate revenue performance resulting from growth in existing stores and digital offerings versus the portion resulting from opening new stores or closing existing stores. The method of calculating comparable sales varies across the retail industry. As a result, our method of calculating comparable sales may not be the same as other retailers’ methods.
Revenue Category Reclassification
Beginning in the first quarter of fiscal 2027, we reclassified certain amounts within our revenue categories to better align with management's current view of the business. The reclassification primarily relates to credit card revenue and digital content revenue (including digital gaming, software and subscriptions) that were previously included in various product revenue categories and, following the reclassification, are now included within services revenue. The reclassification impacts only the presentation of revenue by category and does not affect previously reported total revenue, total comparable sales, net earnings or cash flows. Revenue mix and comparable sales by revenue category for the three and six months ended August 2, 2025, have been recast to conform with this reclassification.
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The key components of each revenue category are now as follows:
•Computing and Mobile Phones - computing (including desktops, notebooks and peripherals), mobile phones (including related mobile network carrier commissions), networking, tablets (including e-readers) and wearables (including smartwatches);
•Consumer Electronics - digital imaging, health and fitness products, home theater (including accessories, soundbars and televisions), portable audio (including headphones and portable speakers) and smart home;
•Appliances - large appliances (including dishwashers, laundry, ovens and refrigerators) and small appliances (including blenders, coffee makers, vacuums and personal care);
•Entertainment - drones, gaming (including hardware, peripherals and certain software, as well as AI glasses and trading cards), toys and virtual reality;
•Services - advertising, credit card revenue, digital content (including digital gaming, software and subscriptions), fulfillment, health-related services, installation, marketplace commissions, memberships, repair, technical support and warranty-related services; and
•Other - other product offerings (including baby, food and beverage and outdoor living).
Non-GAAP Financial Measures
This MD&A includes financial information prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”), as well as certain non-GAAP financial measures, such as consolidated adjusted selling, general and administrative expenses ("SG&A"), consolidated adjusted SG&A rate, consolidated adjusted operating income, consolidated adjusted operating income rate, consolidated adjusted effective tax rate and consolidated adjusted diluted earnings per share (“EPS”). We believe that non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, provide additional useful information for evaluating current period performance and assessing future performance. For these reasons, internal management reporting, including budgets, forecasts and financial targets used for short-term incentives are based on non-GAAP financial measures. Generally, our non-GAAP financial measures include adjustments for items such as restructuring charges, goodwill and acquired intangible asset impairments, certain long-lived asset impairments, price-fixing settlements, gains and losses on disposals of subsidiaries and certain investments, amortization of definite-lived intangible assets associated with acquisitions, certain acquisition-related costs and the tax effect of all such items. In addition, certain other items may be excluded from non-GAAP financial measures when we believe doing so provides greater clarity to management and our investors. We provide reconciliations of the most comparable financial measures presented in accordance with GAAP to presented non-GAAP financial measures that enable investors to understand the adjustments made in arriving at the non-GAAP financial measures and to evaluate performance using the same metrics as management. These non-GAAP financial measures should be considered in addition to, and not superior to or as a substitute for, GAAP financial measures. We strongly encourage investors and shareholders to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure. Non-GAAP financial measures may be calculated differently from similarly titled measures used by other companies, thereby limiting their usefulness for comparative purposes.
In our discussions of the operating results of our consolidated business and our International segment, we sometimes refer to the impact of changes in foreign currency exchange rates or the impact of foreign currency exchange rate fluctuations, which are references to the differences between the foreign currency exchange rates we use to convert the International segment’s operating results from local currencies into U.S. dollars for reporting purposes. We also may use the term “constant currency,” which represents results adjusted to exclude foreign currency impacts. We calculate those impacts as the difference between the current period results translated using the current period currency exchange rates and using the comparable prior period currency exchange rates. We believe the disclosure of revenue changes in constant currency provides useful supplementary information to investors in light of significant fluctuations in currency rates.
Refer to the Non-GAAP Financial Measures section below for detailed reconciliations of items impacting consolidated adjusted SG&A, consolidated adjusted operating income, consolidated adjusted effective tax rate and consolidated adjusted diluted EPS in the presented periods.
Tariff Refunds
In the second quarter of fiscal 2027, $34 million of tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") were refunded pursuant to the U.S. Supreme Court decision on February 20, 2026, that such tariffs were unauthorized. On September 2, 2026, an additional $41 million was refunded, which will be recorded in the financial statements in the third quarter of fiscal 2027. These refunds, in aggregate, represent substantially all of the tariff refunds we have requested. Tariff refunds are recorded as a reduction to Cost of sales on our Condensed Consolidated Statements of Earnings in the fiscal period received.
As tariff and trade policy discussions are ongoing and related matters continue to evolve, we cannot predict with certainty their ultimate impact on our business in future periods, including our results of operations and cash flows. For more information on these risks and uncertainties, see Item 1A, Risk Factors, of our most recent Annual Report on Form 10-K.
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Results of Operations
Consolidated Results
Selected consolidated financial data was as follows ($ in millions, except per share amounts):
| Three Months Ended | Six Months Ended | |||||||||||||||||||||
| August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | |||||||||||||||||||
| Revenue | $ | 9,779 | $ | 9,438 | $ | 18,715 | $ | 18,205 | ||||||||||||||
| Revenue % change | 3.6 | % | 1.6 | % | 2.8 | % | 0.4 | % | ||||||||||||||
| Comparable sales % change | 4.1 | % | 1.6 | % | 3.1 | % | 0.4 | % | ||||||||||||||
| Gross profit | $ | 2,338 | $ | 2,194 | $ | 4,440 | $ | 4,243 | ||||||||||||||
Gross profit as a % of revenue(1) | 23.9 | % | 23.2 | % | 23.7 | % | 23.3 | % | ||||||||||||||
| Selling, general and administrative expense ("SG&A") | $ | 1,923 | $ | 1,829 | $ | 3,664 | $ | 3,550 | ||||||||||||||
SG&A as a % of revenue(1) | 19.7 | % | 19.4 | % | 19.6 | % | 19.5 | % | ||||||||||||||
| Restructuring charges | $ | (6) | $ | 114 | $ | (15) | $ | 223 | ||||||||||||||
| Operating income | $ | 421 | $ | 251 | $ | 791 | $ | 470 | ||||||||||||||
| Operating income as a % of revenue | 4.3 | % | 2.7 | % | 4.2 | % | 2.6 | % | ||||||||||||||
| Net earnings | $ | 315 | $ | 186 | $ | 591 | $ | 388 | ||||||||||||||
| Diluted EPS | $ | 1.48 | $ | 0.87 | $ | 2.79 | $ | 1.82 | ||||||||||||||
(1)Because retailers vary in how they record costs of operating their supply chain between cost of sales and SG&A, our gross profit rate and SG&A rate may not be comparable to other retailers’ corresponding rates. For additional information regarding costs classified in cost of sales and SG&A, refer to Note 1, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in Item 8, Financial Statements and Supplementary Data, of our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.
In the second quarter and first six months of fiscal 2027, we generated $9.8 billion and $18.7 billion in revenue, respectively, and our comparable sales grew 4.1% and 3.1%, respectively, driven by growth in many of our major product categories, as well as strong performance in our Best Buy Marketplace and Best Buy Ads initiatives. Our results reflect the benefits of ongoing investments in our business, including elevating specialty expertise in our stores, partnering closely with our vendors to bring innovation to market, and improving fulfillment speed and execution across our supply chain, as well as a healthy demand environment.
Comparable sales increased in the second quarter of fiscal 2027, primarily driven by computing, home theater, AI glasses and trading cards. This growth was partially offset by a comparable sales decline in the traditional gaming category.
Comparable sales increased in the first six months of fiscal 2027, primarily driven by computing, mobile phones, AI glasses, home theater and trading cards, partially offset by comparable sales declines in large appliances and the traditional gaming category.
We recorded a reduction to restructuring charges in the second quarter and first six months of fiscal 2027, primarily related to subsequent adjustments for termination benefits associated with previously planned organizational changes. Refer to Note 2, Restructuring, of the Notes to Consolidated Financial Statements for additional information.
Operating income rate increased in the second quarter and first six months of fiscal 2027, primarily due to lower restructuring charges and favorable gross profit rates.
Diluted EPS increased in the second quarter and first six months of fiscal 2027, primarily due to higher operating income.
Revenue, gross profit rate, SG&A rate and operating income rate changes in the second quarter and first six months of fiscal 2027 were primarily driven by our Domestic segment. For further discussion of our Domestic and International segments, see Segment Performance Summary, below.
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Store Summary
Stores open by segment were as follows:
| August 1, 2026 | August 2, 2025 | |||||||||
| Best Buy | 886 | 885 | ||||||||
| Outlet Centers | 18 | 23 | ||||||||
| Pacific Sales | 20 | 20 | ||||||||
| Yardbird | 2 | 21 | ||||||||
| Total Domestic stores | 926 | 949 | ||||||||
| Canada Best Buy stores | 130 | 128 | ||||||||
| Canada Best Buy Mobile stand-alone stores | 12 | 28 | ||||||||
Total International stores(1) | 142 | 156 | ||||||||
| Total stores | 1,068 | 1,105 | ||||||||
(1)Excludes Best Buy Express stores leased by Bell Canada.
We continuously monitor store performance as part of a market-driven, omnichannel strategy. As we approach the expiration of leases, we evaluate various options for each location, including whether a store should remain open. We currently expect to increase our Domestic segment Best Buy store count by an additional two stores by the end of fiscal 2027.
Income Tax Expense
Income tax expense increased to $116 million in the second quarter of fiscal 2027 compared to $68 million in the second quarter of fiscal 2026, primarily due to higher pre-tax income. Effective tax rate (“ETR”) increased to 27.1% in the second quarter of fiscal 2027 compared to 26.8% in the second quarter of fiscal 2026, primarily due to prior-year tax benefits from the restructuring charges and associated exit of a component of our Best Buy Health business, partially offset by the impact of higher pre-tax income.
Income tax expense increased to $218 million in the first six months of fiscal 2027 compared to $87 million in the first six months of fiscal 2026, primarily due to the discrete tax impacts of the restructuring charges and associated exit of a component of our Best Buy Health business in the prior year, as well as higher pre-tax income. ETR increased to 27.0% in the first six months of fiscal 2027 compared to 18.3% in the first six months of fiscal 2026, primarily due to prior-year tax benefits from the restructuring charges and associated exit of a component of our Best Buy Health business, partially offset by the impact of higher pre-tax income. See Note 2, Restructuring, of the Notes to Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for additional information.
Our tax provision for interim periods is determined using an estimate of our annual ETR, adjusted for discrete and unusual and infrequent items, if any, that are taken into account in the relevant period. We update our estimate of the annual ETR each quarter, and we make a cumulative adjustment if our estimated tax rate changes. Our quarterly tax provision and our quarterly estimate of our annual ETR are subject to variation due to several factors, including our ability to accurately forecast our pre-tax and taxable income and loss by jurisdiction, tax audit developments, recognition of excess tax benefits or deficiencies related to stock-based compensation, foreign currency gains (losses), changes in laws or regulations, and expenses or losses for which tax benefits are not recognized. Our ETR can be more or less volatile based on the amount of pre-tax earnings. For example, the impact of discrete items and non-deductible losses on our ETR is greater when our pre-tax earnings are lower.
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Segment Performance Summary
Domestic Segment
Selected financial data for the Domestic segment was as follows ($ in millions):
| Three Months Ended | Six Months Ended | |||||||||||||||||||||
| August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | |||||||||||||||||||
| Revenue | $ | 9,070 | $ | 8,698 | $ | 17,319 | $ | 16,825 | ||||||||||||||
| Revenue % change | 4.3 | % | 0.9 | % | 2.9 | % | - | % | ||||||||||||||
Comparable sales % change(1) | 4.5 | % | 1.1 | % | 3.2 | % | 0.2 | % | ||||||||||||||
| Gross profit | $ | 2,180 | $ | 2,033 | $ | 4,134 | $ | 3,941 | ||||||||||||||
| Gross profit as a % of revenue | 24.0 | % | 23.4 | % | 23.9 | % | 23.4 | % | ||||||||||||||
Adjusted SG&A(2) | $ | 1,776 | $ | 1,682 | $ | 3,372 | $ | 3,261 | ||||||||||||||
Adjusted SG&A as a % of revenue(3) | 19.6 | % | 19.3 | % | 19.5 | % | 19.4 | % | ||||||||||||||
Adjusted operating income(2) | $ | 404 | $ | 351 | $ | 762 | $ | 680 | ||||||||||||||
Adjusted operating income as a % of revenue(4) | 4.5 | % | 4.0 | % | 4.4 | % | 4.0 | % | ||||||||||||||
| Selected Online Revenue Data | ||||||||||||||||||||||
| Total online revenue | $ | 3,002 | $ | 2,856 | $ | 5,618 | $ | 5,435 | ||||||||||||||
| Online revenue as a % of total segment revenue | 33.1 | % | 32.8 | % | 32.4 | % | 32.3 | % | ||||||||||||||
Comparable online sales % change(1) | 5.1 | % | 5.1 | % | 3.4 | % | 3.7 | % | ||||||||||||||
(1)Comparable online sales are included in the comparable sales calculation.
(2)Represents segment Adjusted SG&A and segment Adjusted operating income in accordance with Accounting Standards Codification ("ASC") 280, Segment Reporting.
(3)Adjusted SG&A as a % of revenue is calculated as segment Adjusted SG&A divided by segment Revenue.
(4)Adjusted operating income as a % of revenue is calculated as segment Adjusted operating income divided by segment Revenue.
Domestic segment revenue increased in the second quarter of fiscal 2027, primarily driven by comparable sales growth in computing, home theater, AI glasses and trading cards. This growth was partially offset by a comparable sales decline in the traditional gaming category.
Domestic segment revenue increased in the first six months of fiscal 2027, primarily driven by comparable sales growth in computing, AI glasses, home theater, mobile phones and trading cards, partially offset by a comparable sales decline in large appliances.
Domestic segment revenue mix percentages and comparable sales percentage changes by revenue category were as follows:
| Revenue Mix | Comparable Sales | |||||||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||||||||
| August 1, 2026 | August 2, 2025(1) | August 1, 2026 | August 2, 2025(1) | |||||||||||||||||||
| Computing and Mobile Phones | 46 | % | 44 | % | 6.8 | % | 3.8 | % | ||||||||||||||
| Consumer Electronics | 27 | % | 27 | % | 5.6 | % | (5.2) | % | ||||||||||||||
| Appliances | 12 | % | 12 | % | 0.2 | % | (9.2) | % | ||||||||||||||
| Services | 9 | % | 9 | % | 6.4 | % | 3.7 | % | ||||||||||||||
| Entertainment | 6 | % | 7 | % | (6.3) | % | 39.3 | % | ||||||||||||||
| Other | - | % | 1 | % | (21.1) | % | (18.4) | % | ||||||||||||||
| Total | 100 | % | 100 | % | 4.5 | % | 1.1 | % | ||||||||||||||
(1) Revenue mix and comparable sales by revenue category for the three months ended August 2, 2025, have been recast to conform to the current presentation. See Revenue Category Reclassification, above, for additional information.
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Notable comparable sales changes by revenue category were as follows:
•Computing and Mobile Phones: Comparable sales growth was driven primarily by computing, tablets and mobile phones.
•Consumer Electronics: Comparable sales growth was driven primarily by home theater.
•Appliances: Comparable sales growth was driven primarily by large appliances, partially offset by a comparable sales decline in small appliances.
•Services: Comparable sales growth was driven primarily by Best Buy Marketplace and warranty services.
•Entertainment: Comparable sales decline was driven primarily by the traditional gaming category, partially offset by comparable sales growth in AI glasses and trading cards.
Domestic segment gross profit rate increased in the second quarter of fiscal 2027, primarily due to growth in Best Buy Marketplace and Best Buy Ads, and IEEPA tariff refunds of $34 million. These increases were partially offset by lower product margin rates.
Domestic segment gross profit rate increased in the first six months of fiscal 2027, primarily due to growth in Best Buy Marketplace and Best Buy Ads, IEEPA tariff refunds of $34 million, lower supply chain costs and improved financial performance from our traditional services offerings. These increases were partially offset by lower product margin rates.
Domestic segment adjusted SG&A increased in the second quarter of fiscal 2027, primarily due to higher employee compensation expense, which includes incentive compensation, higher expenses related to our Best Buy Marketplace and Best Buy Ads initiatives, and higher advertising expense. These increases were partially offset by lower Best Buy Health expense.
Domestic segment adjusted SG&A increased in the first six months of fiscal 2027, primarily due to higher employee compensation expense, which includes incentive compensation, higher expenses related to our Best Buy Marketplace and Best Buy Ads initiatives, and higher credit card processing fees. These increases were partially offset by lower Best Buy Health expense and lower depreciation expense.
Domestic segment adjusted operating income rate increased in the second quarter and first six months of fiscal 2027, primarily due to favorable gross profit rates.
International Segment
Selected financial data for the International segment was as follows ($ in millions):
| Three Months Ended | Six Months Ended | |||||||||||||||||||||
| August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | |||||||||||||||||||
| Revenue | $ | 709 | $ | 740 | $ | 1,396 | $ | 1,380 | ||||||||||||||
| Revenue % change | (4.2) | % | 11.3 | % | 1.2 | % | 5.4 | % | ||||||||||||||
| Comparable sales % change | (1.8) | % | 7.6 | % | 1.3 | % | 3.5 | % | ||||||||||||||
| Gross profit | $ | 158 | $ | 161 | $ | 306 | $ | 302 | ||||||||||||||
| Gross profit as a % of revenue | 22.3 | % | 21.8 | % | 21.9 | % | 21.9 | % | ||||||||||||||
Adjusted SG&A(1) | $ | 145 | $ | 143 | $ | 288 | $ | 280 | ||||||||||||||
Adjusted SG&A as a % of revenue(2) | 20.5 | % | 19.3 | % | 20.6 | % | 20.3 | % | ||||||||||||||
Adjusted operating income(1) | $ | 13 | $ | 18 | $ | 18 | $ | 22 | ||||||||||||||
Adjusted operating income as a % of revenue(3) | 1.8 | % | 2.4 | % | 1.3 | % | 1.6 | % | ||||||||||||||
(1)Represents segment Adjusted SG&A and segment Adjusted operating income in accordance with ASC 280, Segment Reporting.
(2)Adjusted SG&A as a % of revenue is calculated as segment Adjusted SG&A divided by segment Revenue.
(3)Adjusted operating income as a % of revenue is calculated as segment Adjusted operating income divided by segment Revenue.
International segment revenue decreased in the second quarter of fiscal 2027, primarily driven by a comparable sales decline in gaming, partially offset by comparable sales growth in mobile phones and the unfavorable impact of foreign exchange rates.
International segment revenue increased in the first six months of fiscal 2027, primarily driven by comparable sales growth in mobile phones and digital imaging, partially offset by a comparable sales decline in gaming.
22
International segment revenue mix percentages and comparable sales percentage changes by revenue category were as follows:
| Revenue Mix | Comparable Sales | |||||||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||||||||
| August 1, 2026 | August 2, 2025(1) | August 1, 2026 | August 2, 2025(1) | |||||||||||||||||||
| Computing and Mobile Phones | 47 | % | 46 | % | 2.1 | % | 9.1 | % | ||||||||||||||
| Consumer Electronics | 28 | % | 26 | % | 2.5 | % | 0.9 | % | ||||||||||||||
| Appliances | 10 | % | 11 | % | (9.9) | % | (6.1) | % | ||||||||||||||
| Services | 7 | % | 7 | % | 0.2 | % | 10.7 | % | ||||||||||||||
| Entertainment | 7 | % | 9 | % | (25.2) | % | 57.5 | % | ||||||||||||||
| Other | 1 | % | 1 | % | (5.9) | % | (7.1) | % | ||||||||||||||
| Total | 100 | % | 100 | % | (1.8) | % | 7.6 | % | ||||||||||||||
(1)Revenue mix and comparable sales by revenue category for the three months ended August 2, 2025, have been recast to conform to the current presentation. See Revenue Category Reclassification, above, for additional information.
Notable comparable sales changes by revenue category were as follows:
•Computing and Mobile Phones: Comparable sales growth was driven primarily by mobile phones, partially offset by a comparable sales decline in tablets.
•Consumer Electronics: Comparable sales growth was driven primarily by digital imaging.
•Appliances: Comparable sales decline was driven primarily by small appliances.
•Services: Comparable sales growth was driven primarily by growth in marketplace, partially offset by a comparable sales decline in warranty services.
•Entertainment: Comparable sales decline was driven primarily by gaming.
International segment gross profit rate increased in the second quarter of fiscal 2027, primarily due to improved product margin rates.
International segment gross profit rate was effectively unchanged in the first six months of fiscal 2027.
International segment adjusted SG&A increased in the second quarter of fiscal 2027, primarily due to higher advertising and depreciation expense, partially offset by the favorable impact of foreign exchange rates.
International segment adjusted SG&A increased in the first six months of fiscal 2027, primarily due to higher depreciation and advertising expense, as well as the unfavorable impact of foreign exchange rates. These increases were partially offset by lower employee compensation expense.
International segment adjusted operating income rate decreased in the second quarter of fiscal 2027, primarily due to decreased leverage from lower sales volumes, which contributed to an unfavorable adjusted SG&A rate, partially offset by a favorable gross profit rate.
International segment adjusted operating income rate decreased in the first six months of fiscal 2027, primarily due to an unfavorable adjusted SG&A rate.
23
Non-GAAP Financial Measures
Reconciliations of consolidated SG&A, consolidated operating income, consolidated effective tax rate and consolidated diluted EPS (GAAP financial measures) to consolidated adjusted SG&A, consolidated adjusted operating income, consolidated adjusted effective tax rate and consolidated adjusted diluted EPS (non-GAAP financial measures), respectively, were as follows ($ in millions, except per share amounts):
| Three Months Ended | Six Months Ended | |||||||||||||||||||||
| August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | |||||||||||||||||||
| SG&A | $ | 1,923 | $ | 1,829 | $ | 3,664 | $ | 3,550 | ||||||||||||||
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-09-23 | Scarlett Kathleen | SEVP, CHRO | Sell | -116,062 ×2 | $92.15 | -$10,695,364 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-12-04 10-Q expected by 2026-12-10 (in 46 days)
- ~2027-03-17 10-K expected by 2027-03-29 (in 149 days)
- ~2027-06-04 10-Q expected by 2027-06-10 (in 228 days)
- ~2027-09-03 10-Q expected by 2027-09-09 (in 319 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-09-25 S-3ASR S-3ASR
- 2026-09-04 10-Q Quarterly Report
- 2026-08-27 8-K Earnings Release; Financial Statements and Exhibits
- 2026-08-03 8-K Officer/Director Change; Financial Statements and Exhibits
- 2026-06-22 8-K Officer/Director Change; Financial Statements and Exhibits
- 2026-06-05 10-Q Quarterly Report
- 2026-05-28 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-30 DEF 14A Proxy Statement
- 2026-04-22 8-K Officer/Director Change; Financial Statements and Exhibits
- 2026-03-18 10-K Annual Report
- 2026-03-03 8-K Earnings Release; Financial Statements and Exhibits
- 2025-12-10 8-K/A Officer/Director Change
- 2025-12-05 10-Q Quarterly Report
- 2025-12-01 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-11-25 8-K Earnings Release; Financial Statements and Exhibits