BBY 10-K & 10-Q changes, risk factors and insider trading
Best Buy Co. Inc. · NYSE · Retail-Radio, Tv & Consumer Electronics Stores · CIK 764478 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Removed heading “The execution of our strategy relating to certain products and services (including health technology, services and logistics) brings business, financial and regulatory risks.”
Removed heading “We face a heightened risk of cybersecurity attacks or data security incidents, which could have a material adverse impact on our business.”
Largest changes
“The risk accompanied with operating in the health sector may lead to a range of consequences, including, but not limited to, customer complaints, individual consumer claims or class actions, product recalls, temporary bans on products, stoppages at production facilities, orders to stop providing services, remediation costs, corrective action plans, fines, penalties, regulatory enforcement actions, potential loss of business and impairment of our ability to continue participation in government healthcare programs. …”see in full comparison
“Additionally, newly applicable and potential new or significantly revised state, provincial and federal laws and regulations in the jurisdictions in which we do business are expanding (and may further expand) our obligations to protect and honor the privacy and security of personal information, imposing new restrictions on the collection, use, sharing and retention of data and requiring additional implementation resources, all of which create incremental risk arising from a potential breach or compliance failure. …”see in full comparison
see in full comparisonWe utilize complex information technology platforms to operate our websites and mobile applications.If we fail to secure these systems against attacks, or fail to effectively configure, upgrade and maintain our hardware, software, network, and system infrastructure and improve theefficiencyefficiency, resiliency andresiliencycapacity of our systems, it could cause system interruptions anddelays.delaysDisruptionsand hinder our ability totheseacceptservices,andsuchfulfillascustomerthoseorders,causedprovidebycustomerunforeseenservicetrafficand/orlevels, malicious attacks by foreign governments, criminals orperform othernon-statenecessaryactors,businessotherfunctions.technicalAnydifficulties or events outside of our control, such as natural disasters, power or telecommunications failures or loss of critical data, could prevent us from accepting and fulfilling customer orders for products or services, whichinterruption could haveana material adverse impact on ourrevenue,revenue and operations, cause us to incur material costs andcould/or adversely affect our reputation.If a cybersecurity event is related to data that is regulated, such as under HIPAA, GDPR or California Consumer Privacy Act, in addition to the direct business risks noted, we could be subject to additional regulatory investigations, penalties and fines.
Increasing costs associated with information security and privacy, such as increased investment in technology and qualified staff, costs of compliance, costs resulting from fraud or criminal activity and costs of cyber and privacy insurance, could cause our business and results of operations to suffer materially.see in full comparisonAdditionally, newly applicable and potential new or significantly revised state, provincial and federal laws and regulations in the jurisdictions in which we do business are expanding our obligations to protect and honor the privacy and security of customer data, requiring additional resources and creating incremental risk arising from a potential breach or compliance failure.In addition, any compromise of our data security may materially increase the costs we incur to protect against such breaches and could subject us to additional legal risk. Any compromise of our customer information or other confidential information could have a material adverse impact on our reputation and/or our relationships with our customers and partners, which may in turn have a negative impact on our revenue and may expose us to material costs, penalties and claims.
“While we directly import approximately 2% to 3% of our overall assortment, our complex supply chain is heavily reliant on vendor imports from China and Mexico, which we currently estimate make up approximately 55% and 20%, respectively, of the products we purchase. Moreover, the consumer electronics we sell and our underlying technological infrastructure are dependent on rare earth elements, predominantly processed in China. Recently passed or proposed tariffs involving these countries could have an adverse impact on our operations. …”see in full comparison
“While we directly import approximately 1% to 3% of our overall assortment, our global supply chain for consumer electronics is heavily reliant on vendor imports from foreign countries (including products sourced from China, Mexico and Southeast Asia). Consequently, our financial results are highly sensitive to changes in trade policies, tariffs and cross-border logistics. The scope, timing, and implementation of these policies remains uncertain and may result in new or modified tariff regimes, additional regulatory requirements, or further trade friction with U.S. trading partners. …”see in full comparison
Full comparison: every changed paragraph (203)
Described below are certain risks we believe apply to our business and the industry in which we operate. The risks are categorized using the following headings: external, strategic, operational, regulatoryregulatory, compliance and legal, and financial and market. Each of the following risk factors should be carefully considered in conjunction with other information provided in this Annual Report on Form 10-K and in our other public disclosures. The risks described below highlight potential events, trends or other circumstances that could adversely affect our business, financial condition, results of operations, cash flows, liquidity or access to sources of financing and, consequently, the market value of our common stock and debt instruments. These risks could cause our future results to differ materially from historical results and from guidance we may provide regarding our expectations of future financial performance. The risks described below are not an exhaustive list of all the risks we face. There may be others that we have not identified or that we have deemed to be immaterial. All forward-looking statements made by us or on our behalf are qualified by the risks described below.
To varying degrees, our products and services are sensitive to changes in macroeconomic conditions. Consumer demand for the products and services that we offer could bebe, or could continue to be, affected by a number of factors, including: real GDP growth, inflation, recession, consumer confidence, employment levels, effects of government closures, cost of living, uncertainty over the availability of government benefits, tax rates, availability of consumer financing, interest rates, housing market conditions, foreign currency exchange rates, the price of oil, gas and other commodities,commodities and other macroeconomic trends. Additionally, the impact of these factors could be compounded with respect to discretionary purchases of consumer electronics.
•whether or not theyconsumers make a purchase;
•how frequently theyconsumers upgrade or replace their devices;
their•consumers' choice of brand, model or price-point; and
their•consumers' appetite for complementary services (for example, My Best Buy Plus™ or My Best Buy Total™ membership).
We are subject to specific pressures that may increase our product prices, including high consumer demand, inflation, governmental actions (e.g., tariffs) and supply chain disruptions. Additionally, price increases in the products we purchase for resale may require us to adjust our sales prices. Our ability to increase prices to offset these pressures might be limited, requiring us to absorb these increases within our margins. Increases in the cost of living may also put pressure on our ability to offer competitive compensation and other employer-provided benefits and may adversely affect our financial results. Any economic factors or circumstances resulting in higher costs for transportation, labor, insurance costs,insurance, healthcare costs or commodity pricescommodities can increase our cost of sales and operating, selling, general and administrative expensescosts and otherwise materially adversely affect our financial results.
Geopolitical tensions, both domestic and international, including issues related to trade routes, political instability and divisiveness, the potential implementation of more restrictive trade policies, highertariff tariffsincreases and/or volatility, the realignment of alliances or the renegotiation of existing trade agreements could continue to have a material adverse impact on our business.
While we directly import approximately 1% to 3% of our overall assortment, our global supply chain for consumer electronics is heavily reliant on vendor imports from foreign countries (including products sourced from China, Mexico and Southeast Asia). Consequently, our financial results are highly sensitive to changes in trade policies, tariffs and cross-border logistics. The scope, timing, and implementation of these policies remains uncertain and may result in new or modified tariff regimes, additional regulatory requirements, or further trade friction with U.S. trading partners. The uncertainty caused by ongoing tariff volatility creates challenges for planning inventory, pricing and supply chain strategies, which could continue to impact our cost structure, supply chain stability and overall financial results.
While we directly import approximately 2% to 3% of our overall assortment, our complex supply chain is heavily reliant on vendor imports from China and Mexico, which we currently estimate make up approximately 55% and 20%, respectively, of the products we purchase. Moreover, the consumer electronics we sell and our underlying technological infrastructure are dependent on rare earth elements, predominantly processed in China. Recently passed or proposed tariffs involving these countries could have an adverse impact on our operations. Any further changes in, or uncertainty surrounding, trade policies with these countries, including tariffs on products and parts imported by us or our vendors, as well as any international retaliatory actions, could increase costs, disrupt our supply chain and/or impact the availability of underlying technology critical to our operations. Additionally, changes in, or uncertainty surrounding, policies or efforts that may affect the flow of trade, especially those impacting critical international trade routes, such as the Panama Canal and the Suez Canal, could potentially cause disruption to the global supply chain and may adversely affect our operations and financial results.
Ongoing or emerging conflicts, including those in Ukraine, the Middle EastEast, Ukraine and the South China Sea, may continue to impact fuel prices, inflation, the global supply chain, cybersecurity and other macroeconomic conditions, which may further adversely affect global economic growth, consumer confidence and demand for our products and services. For example, attacks on cargo ships in the Red Sea, catalyzed by tensions in the Middle East, continue to disrupt global trade flows and shipping capacity. Additionally, any further deterioration of relations between Taiwan and China, the resulting actions taken, the response of the international community and other factors affecting trade with China or political or economic conditions in Taiwan could disrupt the manufacturing and distribution of products or hardware components in the region, such as semiconductors and television panels sourced from Taiwan or the broader array of products sourced from China. Additionally, conflict in the Middle East, and the resulting disruption of transit through the Persian Gulf and the Strait of Hormuz, continues to disrupt global supply chain flows and impact fuel prices. Furthermore, these conflicts or other international policies and efforts may impact, or continue to impact, our critical international trade routes, such as the Panama Canal, the Red Sea and the Suez Canal. Such disruptions may increase shipping times or costs, which could adversely affect our operations and financial results.
Geopolitical tensions may provoke further retaliatory actions by our trading partners that may increase costs, disrupt our supply chain and/or impact our business operations. China maintains significant control over the majority of rare earth elements, which are essential elements in many electronic devices. Should China reinstate its export ban on rare earth elements or take other actions that restrict U.S. supply of these minerals, it would impact both the consumer electronics we sell and our business’s underlying technological infrastructure.
These trade restrictions and any associated political uncertainty surrounding international trade measures and international relations may affect market stability and consumer confidence. One or more of these factors could have a material adverse effect on our supply chain, the cost of our products or our revenues and financial results.
Catastrophic events, including the effects of climate change,events could adversely affect our operating results.
Catastrophic events, including those driven or intensified by climate change, pose a growing risk to our operating results and financial performance. The frequency and severity of natural disasters or extreme weather events (such as storms, blizzards, extreme temperatures, earthquakes, hurricanes, floods, fires and droughts) are increasing in many of our key markets, particularly in our three largest states by total sales (California, Texas and Florida). We may experience other catastrophic events beyond natural disasters, including pandemics, civil unrest, power loss, telecommunications failures, software and hardware malfunctions, terrorism (including related cyber threats) and other acts of violence. Additionally, the locations where we do business could continue to be the subject of unrest and national attention, which impacts our ability to operate. The adverse effects of these events may be amplified should multiple events occur simultaneously, such as a natural disaster during a pandemic.
The risk and actual occurrence of various catastrophic events could have a material adverse effect on our financial performance. Events that affect our properties, supply chain, partners, workforce or customers may consist of, or be caused by, for example:
natural disasters or extreme weather events (such as storms, blizzards, extreme temperatures, earthquakes, hurricanes, floods, fires and droughts), including those related to, or exacerbated by, climate change;
diseases or pandemics;
power loss, telecommunications failures, or software and hardware malfunctions; and terrorism (including related cyber threats), civil unrest, violent acts or other conflicts.
The number and severity of certain catastrophic events is increasing in many of our markets. Such events canmay adversely affectprevent our workforce and prevent employees and/or customers from reaching our stores and properties. Catastrophic events can alsoproperties, disrupt portionssegments of our supply chain,chain and distribution network andor impact critical third-party services,services. andThese disruptions may impact our ability to procure goods or services requirednecessary for operating our business.business Suchand events can alsomay affect our information technology systems, resulting in disruption to various aspects of our operations, includinglimiting our ability to transact with customers and fulfill orders. The adverse effects of any such catastrophic event would be exacerbated if experienced at the same time as another unexpected and adverse event, such as a pandemic.
Catastrophic events could result in significant physical damage to, or closure of, our facilities. They may also necessitate preventative investments in our facilities and infrastructure. Moreover, insufficient infrastructure investment may increase the risk that large-scale disruptive events could impact our critical infrastructure, potentially having a material adverse impact on our operations and financial performance. As a consequence of these catastrophic events, we may experience interruptions to our operations or losses of property, equipment and/or inventory, which could adversely affect our revenue and profitability.
Three of our largest states by total sales (California, Texas and Florida) are particularly vulnerable to natural disasters and extreme weather conditions. Natural disasters and climate-related events in these states, and other areas where our sales and operations are concentrated, could result in significant physical damage to, or closure of, our facilities and may require upgrades to our facilities and infrastructure.
Additionally, heightened violence and crime in or around our stores, customer homes or businesses where we are performing services may further jeopardize the safety and security of our workforce and customers as well as the general operation of our stores. Further, social unrest/tension, and any related potential for violence, may impact our workforce, customers, properties and the communities where we operate. If our customers, employees and shareholders do not perceive our response to be appropriate or adequate, we could suffer damage to our reputation and brand, which could adversely affect our business.
As a consequence of these catastrophic events, we may experience interruptions to our operations or losses of property, equipment and/or inventory, which could adversely affect our revenue and profitability.
We operate in a highly and increasingly dynamic industry sector fueled by constant technological innovationinnovation, advancement and disruption, including most recently by the proliferationrapid integration of artificial intelligence (“AI”) technologies.into consumer products. These factors manifest in a variety of ways: the emergence of new products and categories, the rapid maturation of categories, cannibalization of categories, changing price points, and product replacement and upgrade cycles.
•failure to offer, or inability to secure an adequate supply of, the products and services that our customers want;
•excess inventory, which may require heavy discountingdiscounting, liquidation or liquidationstorage;
•delays in adapting our merchandising, marketing or supply chain capabilities to accommodate changes in product trends; and damage to our brand and reputation.
•damage to our brand and reputation.
We constantly strive to offer consumers the best value in a highly competitive retail sector. We compete against many local, regional, national and international retailers (both online and brick and mortar), as well as against some of our vendors and mobile network carriers that are leveraging their own direct-to-customer channels to market and sell products.
Shoppers are increasingly price-conscious when making discretionary purchases. At the same time, online and multi-channel retailers are prioritizing fast, low-cost delivery options, including curbside pickup and guaranteed shipping times. Because our strategy is based on offering superior levels of customer service and a full range of complementary services, our cost structure may be higher than some of our competitors, creating additional margin pressure. Failure to manage these factors effectively while offering competitive delivery options could negatively impact our profit margins and the demand for our products.
Our ability to remain competitive also depends on effectively maintaining and growing our customer base and accurately forecasting their spending levels. An inability to drive traffic to physical and digital channels or to maintain brand relevance with target audiences could pose both an operational and financial risk. Additionally, failure to consistently meet customer expectations across stores, in-home services and online platforms could negatively impact our financial performance. Inability to quickly adapt to changes in customer behavior (e.g., AI-driven search, AI shopping bots) could have an adverse impact our financial results.
Competition is becoming increasingly diverse, including through the expansion of retail media networks, such as our retail media network, Best Buy Ads, which competes for brand marketing spend and advertiser attention. Additionally, as our Best Buy Marketplace platform expands, where third-party sellers can sell products on our platform, we face the added challenge of competing not only with external sellers but also with third-party sellers on our own platform.
While we constantly strive to offer consumers the best value, the retail sector is highly competitive. Price is of great importance to most customers, and price transparency and comparability continues to increase. Digital technology enables consumers to compare prices on a real-time basis, putting additional pressure on us to maintain competitive prices. We compete against many local, regional, national and international retailers (both online and brick and mortar), as well as against some of our vendors and mobile network carriers that market their products directly to consumers. Competition is becoming increasingly diverse, including in the advertising revenue space and with the proliferation of marketplace platforms offering products at increasingly lower prices. Diverse competition may also arise from new entrants into the markets we serve, including unexpected players who could more aggressively leverage technologies such as AI and platform integrations.
The retail sector continues to experience increased sales initiated online and using mobile applications, as well as online sales for both in-store or curbside pick-up. Online and multi-channel retailers continue to focus on delivery services, with customers increasingly seeking faster, guaranteed delivery times and low-cost or free shipping. Our ability to offer competitive delivery times and delivery costs depends on many factors and our failure to successfully manage these factors and offer competitive delivery options could negatively impact the demand for our products and our profit margins. Because our business strategy is based on offering superior levels of customer service and a full range of services to complement the products we offer, our cost structure might be higher than some of our competitors, and this, in conjunction with price transparency, could put pressure on our margins.
Further, as our competitors develop and expand their strategic use of AI, our operations and profitability could be adversely impacted if we fail to execute or maintain our own focused AI strategy enablingthat technologydrives technological advancement and innovation. Diverse competition may also arise from new entrants into the markets we serve, including unexpected players who could more aggressively leverage technologies such as AI and platform integrations. As these and related competitive factors evolve,evolve and progress, we may experience material adverse pressure on our revenue and profitability.
Our performance is highly dependent on attracting, retaining and engaging appropriately qualified employees in our stores, service centers, distribution centers, field and corporate offices. Our strategy of offering high-quality services and assistance for our customers requires a highly trained and engaged workforce, which is reliant on the creation and maintenance of a positive culture that is attractive to all qualified employees and beneficial relationships between employees and the enterprise. The turnover rate in the retail sector is relatively high, and there iscreating an ongoing need to recruit and train new employees. Factors that affect ourOur ability to maintain sufficient numbers of qualified employees include,depends foron example,a number of factors, such as employee engagement, our reputation, our ability to train and develop our employees, our ability to connect with and promote available talent pools, our development and maintenance of employer-desiredemployee-desired policies and practices, unemployment rates, competition from other employers, availability of qualified personnel and our ability to offer appropriate compensation and benefit packages. Our policies and practices may be affected by, or require changes in response to, legal and regulatory restrictions on policies related to inclusion and belonging, employee engagement and climate change, which may further impact our ability to retain and engage qualified employees. Failure to recruit or retain qualified employees may impair our efficiency and effectiveness and our ability to pursue growth opportunities. In addition, significant turnover of our executive team or other employees in key positions with specific knowledge relating to our operations and industry may negatively impact our operations and financial results.
Additionally, increasingly prevalent legal and regulatory restrictions on the terms or enforceability of non-competition, employee non-solicitation, confidentiality and similar restrictive covenant clauses could make it more difficult to retain qualified personnel. Further, our policies and practices may be affected by, or require changes in response to, evolving legal and regulatory restrictions on policies related to employee engagement, which may further impact our ability to retain and engage qualified employees.
We operate in a competitive labor marketmarket, and there is a risk that market increases in compensation and employer-provided benefits could have a material adverse effect on our profitability. We may also be subject to continued market pressure to increase employee hourly wage rates and increasedemployer-provided benefits, especially as the cost pressureof onliving employer-providedincreases. benefits.In Ouraddition, needprolonged external stressors (e.g., from violence, political unrest or customer behavior) may affect the mental wellbeing of employees and lead to implementfatigue, correspondingreduced adjustments within our labor modelengagement and compensation and benefit packages could have a material adverse impact on the profitability of our business. Additionally, increasingly prevalent legal and regulatory restrictions on the terms /or enforceability of non-competition, employee non-solicitation, confidentiality and similar restrictive covenant clauses could make it more difficult to retain qualified personnel.attrition.
Failure to recruit or retain qualified employees may impair our efficiency and effectiveness and our ability to pursue growth opportunities. In addition, significant turnover of our executive team or other employees in key positions with specific knowledge relating to our operations and industry may negatively impact our operations and financial results and potentially have cascading effects on our employees.
The execution of our strategy relating to certain products and services (including health technology, services and logistics) brings business, financial and regulatory risks.
In the health sector, we offer a range of products and services, including, for example, Personal Emergency Response (PERS) and Remote Patient Monitoring (RPM) technology and services. As we refine existing offerings and introduce new offerings, we must navigate a complex, dynamic regulatory and technological environment, which may subject us to additional operational, financial and reputational risks. Our customers may not like our new value propositions, and we may be subject to claims if customers of these offerings experience service disruptions, failures or other issues.
Our health sector offerings and the customers we serve bring us into scope for many significant regulatory requirements, including those enforced by the U.S. Food and Drug Administration (FDA), the Centers for Medicaid and Medicaid Services (CMS), State Medicaid Agencies and the Federal Communications Commission (FCC). Additionally, the collection, storage, use and disclosure of personal information subjects us to privacy and security requirements, such as the Health Insurance Portability and Accountability Act (HIPAA), the United Kingdom’s General Data Protection Regulation (GDPR, as retained in United Kingdom law) and numerous state data privacy laws.
The risk accompanied with operating in the health sector may lead to a range of consequences, including, but not limited to, customer complaints, individual consumer claims or class actions, product recalls, temporary bans on products, stoppages at production facilities, orders to stop providing services, remediation costs, corrective action plans, fines, penalties, regulatory enforcement actions, potential loss of business and impairment of our ability to continue participation in government healthcare programs. These and other related issues could have a material adverse impact on our financial results and reputation.
We offer a full range of services that complement our product offerings, including consultation, delivery, design,health-related services, installation, memberships, protection plans, repair, set-up, technical support and health,warranty-related safety and caregiving monitoring and support.services. The strategy and execution of our service offerings are subject to incremental risks.risks, Thesesuch risks could include, for exampleas:
•a sustained increase in consumer desire to purchase product offerings online and through mobile applications, impacting our ability to sell ancillary services;
inability to sustain and operate a technology infrastructure sufficient to support our services growth;
ongoing pressure on margins from our Best Buy membership offerings, and the risk that increased volumes will not fully compensate for lower margins;
increased labor expenses and inability to accurately forecast staffing levels to meet customer needs and demands;
pressure on traditional labor models to meet the evolving landscape of offerings and customer needs;
responsibility for third parties that fail to meet our standards or fail to comply with applicable labor and independent contractor regulations;
increased reputational risk of bad actors posing as Geek Squad and/or customer care;
increased risk of errors or omissions in the fulfillment of services;
•unpredictable extended warranty failure rates and related expenses;
•margin pressure from membership offerings;
•pressure from lower-cost competitors that could erode the value proposition of our premium services;
•the continual need to maintain and upgrade the technology infrastructure supporting our services;
•increased labor expenses and challenges in forecasting staffing needs, as well as pressure on traditional labor models to meet evolving customer expectations;
•bad actors posing as Geek Squad and/or customer care;
•potential claims liability due to employees traveling in company vehicles and/or working in customer homes;
Management's Discussion & Analysis (MD&A)
New heading “Drive omni-channel experiences that resonate with customers”
New heading “Scaling Best Buy Ads and Best Buy Marketplace”
Removed heading “Omni-channel enhancements”
Removed heading “Investment in new growth initiatives”
Removed heading “Operational efficiency”
Largest changes
Diluted EPSsee in full comparisondecreasedincreased in fiscal2025,2026, primarily due to higher net earnings driven by loweroperatinggoodwillincome.and intangible asset impairments, partially offset by higher restructuring charges.
“During fiscal 2026, U.S. tariffs were imposed under the International Emergency Economic Powers Act (the “IEEPA”) that applied to certain imported private‑label branded and direct import products that we sold during the year or held in inventory as of the end of the fiscal year. While we directly import approximately 1% to 3% of our overall assortment, our supply chain is highly dependent on vendor imports, including product sourced from China, Mexico and Southeast Asia.”see in full comparison
see in full comparisonTheGoodwillgoodwillandimpairmentintangible asset impairments in fiscal20252026waswere related toourBest Buy Health. A change in Best Buy Health’s customer base during the third quarter of fiscal 2026 resulted in an impairment review of all Best Buy Healthreporting unit.assets. Theimpairmentimpairmentsprimarily arose fromreflect downward revisions of our revenue growth rates and margin rates compared toprojectionsprevioususedprojections, inpriorpartyears.due to pressures in the Medicaid and Medicare Advantage markets. Refer to Note 3, Goodwill and Intangible Assets, of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for additional information.
“(3)Charges in fiscal 2026 primarily related to a labor and store optimization restructuring initiative that commenced in the second quarter of fiscal 2026 and a restructuring initiative within the company's Best Buy Health business that commenced in the first quarter of fiscal 2026. Charges in fiscal 2024 primarily related to an enterprise-wide restructuring initiative that commenced in the fourth quarter of fiscal 2024.”see in full comparison
“(2)Represents charges incurred related to Best Buy Health, comprised of non-cash impairments of goodwill, intangible assets and certain long-lived assets.”see in full comparison
Restructuring charges in fiscalsee in full comparison20252026 were primarilycomprised of adjustments to employee termination benefitsrelated topreviouslyaplanned organizational changeslabor andhigher-than-expectedstoreemployeeoptimizationretention associated with an enterprise-widerestructuring initiative that commenced in thefourthsecond quarter of fiscal2024.2026 and a restructuring initiative focused on optimizing our Best Buy Health business that commenced in the first quarter of fiscal 2026. Refer to Note 2, Restructuring, of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for additional information.
Full comparison: every changed paragraph (106)
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 the Consolidated Financial Statements and related Notes included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. Refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Form 10-K for the fiscal year ended February 3,1, 2024,2025, for discussion of the results of operations for the year ended February 3,1, 2024,2025, compared to the year ended JanuaryFebruary 28,3, 2023,2024, which is incorporated by reference herein.
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 operations in the U.S. and Canada.
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, CurrentBest Health,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, currenthealth.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 SquadSquad, Insignia and TechLiquidators and the domain names bestbuy.ca and techliquidators.ca.
Our fiscal year ends on the Saturday nearest the end of January. Fiscal 2025,2026, fiscal 2025 and fiscal 2024 and fiscal 2023 ended on January 31, 2026, February 1, 2025, and February 3, 2024, and January 28, 2023, respectively. Fiscal 20252026 and fiscal 20232025 each included 52 weeks. Fiscal 2024 included 53 weeks with the 53rd week occurring in the fiscal fourth quarter. 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.
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.
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, websites and call centers 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, websites and call centersstores operating for at least 14 full months. Revenue from online sales is included in comparable sales and representsmonths; sales initiated on a websitewebsite, app or app,virtual regardlessstore; advertising revenue; commercial sales; credit card revenue; gift card breakage; marketplace commission revenue; and sales of whether customers choosemerchandise to havewholesalers productand delivered, or pick up product in store, curbside or at an alternative pick-up location.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 alsoexcludes includes credit card revenue, gift card breakage, commercial sales and sales of merchandise to wholesalers and dealers, as applicable. Revenuerevenue from stores closed more than 14 days,days (including but not limited to relocated, remodeled, expanded and downsized stores, or stores impacted by natural disasters, is excluded from comparable salesdisasters) until at least 14 full months after reopening. Comparable sales excludesreopening; the impact of certain periodic warranty-related profit-share revenue,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.
Consistent with our comparable sales policy, revenue from Best Buy Express locations rebranded as a result of our previously announced collaboration with Bell Canada is excluded from our comparable sales calculation until locations have been operating for at least 14 full months.
We believe comparable sales is a meaningful supplemental metric for investors to evaluate revenue performance resulting from growth in existing stores, websitesstores and calldigital centersofferings 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.
Beginning in the fourth quarter of fiscal 2025, we renamed our non-GAAP financial measures to adjusted financial measures; for example, consolidated non-GAAP operating income has been renamed to consolidated adjusted operating income. The methodology for calculating these measures remains unchanged, and therefore any previously reported non-GAAP financial measures that are renamed to corresponding adjusted financial measures remain unchanged.
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 salesdisposals 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.
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.
Our multi-year strategy remains consistent, which is to strengthen our position in retail as a leading omnichannel destination for technology, while at the same time scaling new profit streams. Our fiscal 2027 priorities and resource allocation philosophy also remain consistent as we build upon the momentum from fiscal 2026. Those priorities are:
Drive omni-channel experiences that resonate with customers
Starting with our digital experiences, we have already activated on ways to bring our products to life through artificial intelligence (“AI”) platforms, which will continue to grow during fiscal 2027. We are also partnering with various platform providers to create a more seamless agentic shopping journey, making it easier for customers to both find and purchase directly from our product catalog. Other fiscal 2027 digital priorities include strengthening customer recognition and personalization, increasing customer adoption and engagement with the Best Buy App and driving digital conversion for categories like major appliances and home theater.
Our strategy for fiscal 2026 involves three key priorities:
Omni-channel enhancements
Starting with our digital experiences, we intend to improve our search and discover capability to make it easier for our customers to find what they want and need. We will leverage artificial intelligence (“AI”) to launch an innovative new search experience across our websites and apps. We will also leverage AI to enhance personalization, which we believe will drive both customer engagement and sales conversion.
In our physical stores, we expectare continuing to prioritize merchandising and store health and appearance updates over large-scale remodels, building onimprove the insightscustomer weexperience havewhile gainedalso from testing and changes implemented withinusing our storesspace more effectively – often in recentpartnership years.with our vendors. From a store labor perspective, we will focus on enhancements and optimization, building on the significant operating model changes we have made in recent years that were designed to provide the experience our customers expect in the most efficient way possible.
Scaling Best Buy Ads and Best Buy Marketplace
Investment in new growth initiatives
We are targeting a mid-fiscal 2026 launch for our new Best Buy Marketplace (“Marketplace”) within our Domestic segment, which we believe will complement our existing product assortment with access to a broader range of products offered by Marketplace sellers. We believe this will unlock potential new commission and advertising revenue, without requiring our investment in inventory.
WeIn haverecent recently elevated our focus on Best Buy Ads,years, our retail media network, and we see fiscal 2026 as a pivotal year. In recent years, Best Buy AdsAds, has primarily served our merchandise vendors. In fiscal 2026,2027, we willanticipate continuecontinuing thisto evolution and also expectgrow Best Buy Ads tothrough expandexisting intoadvertisers as well as other areas of opportunity.opportunity, including advertising agencies and demand-side platforms. In order to support this growth, we planare to investinvesting in our technology capabilities, our Best Buy Ads teammarketing and otherheadcount newacross third-partyour partnerships.sales, operations and technology teams.
During fiscal 2026, we launched Best Buy Marketplace within our Domestic segment, which we believe will complement our existing product assortment with access to a broader range of products offered by marketplace sellers. We believe this will unlock potential new commission and advertising revenue, without requiring inventory investment. In fiscal 2027, we plan to continue to expand our third-party seller count, while investing in technology, advertising and our marketplace team to support future growth.
Operational efficiency
OurDrive thirdefficiencies strategicand priority for fiscal 2026 is to continue our longstanding commitment to operational efficiency by identifyingidentify cost reductions andthat otherare savingscrucial to helphelping to fund investment capacity for new and existing initiatives and offset financialpressure pressures facingin our business.business
In fiscal 2027, we will continue to prioritize our longstanding commitment to operational efficiency by identifying cost reductions and other savings to help fund investment capacity for new and existing initiatives and offset financial pressures facing our business.
During fiscal 2026, U.S. tariffs were imposed under the International Emergency Economic Powers Act (the “IEEPA”) that applied to certain imported private‑label branded and direct import products that we sold during the year or held in inventory as of the end of the fiscal year. While we directly import approximately 1% to 3% of our overall assortment, our supply chain is highly dependent on vendor imports, including product sourced from China, Mexico and Southeast Asia.
On February 20, 2026, the U.S. Supreme Court ruled that tariffs imposed under the IEEPA were unauthorized. The ruling did not address potential refunds. Following the ruling, various actions and proceedings have occurred involving U.S. trade authorities and the U.S. Court of International Trade relating to the administration, collection and potential refund of tariffs imposed under the IEEPA. The outcome of these actions, including the timing, process and ultimate recoverability of any refunds, remains uncertain.
In addition, subsequent to the U.S. Supreme Court’s ruling, the U.S. government has initiated further actions under existing trade authorities to evaluate foreign trade practices, which could result in the imposition of additional tariffs or other trade measures. We will continue to evaluate the potential effects of these developments on our financial position, results of operations and cash flows. For additional information regarding tariff‑related risks, see Item 1A, Risk Factors, in this Annual Report on Form 10‑K.
We enter fiscal 2026 facing significant uncertainty regarding the scope, timing and magnitude of tariffs we may experience for the products we sell and the consequent financial impact on our business. In conjunction with our vendors, we will seek to mitigate the impact of tariffs on our business and our customers. For more information regarding the potential impacts of tariffs on our business, refer to Item 1A, Risk Factors, of this Annual Report on Form 10-K.
In fiscal 2026, our comparable sales returned to growth and we stabilized our market share position while navigating a complex and often evolving tariff situation. We launched and began to scale Best Buy Marketplace within our Domestic segment and grew our retail media network, Best Buy Ads. We believe we were able to both make investments in our strategic initiatives and expand our operating margin through a combination of disciplined expense management and efficiency optimization efforts.
In fiscal 2025, we continued to manage our profitability through strong execution despite revenue declines. As we entered the year, we were operating in an uneven environment and expected there would be industry pressure. Our strategy was to focus on sharpening our customer experiences and industry positioning while optimizing our operating income rate.
In fiscal 2026, we generated $41.7 billion in revenue, compared to $41.5 billion in fiscal 2025, and our comparable sales grew 0.5%, primarily driven by comparable sales growth in computing and mobile phones, partially offset by comparable sales declines in home theater and appliances. The comparable sales growth was due to a mix of new technology innovation, our continued focus on omni-channel customer experience and strong vendor partnerships.
In fiscal 2025, we generated $41.5 billion in revenue, compared to $43.5 billion in fiscal 2024 that included approximately $735 million in revenue from the 53rd week. Our comparable sales declined 2.3% in fiscal 2025, as we continued to operate in a challenged consumer electronics industry and experienced softer consumer demand. While our comparable sales declined in fiscal 2025 in categories such as appliances, home theater and gaming, we grew comparable sales in our computing, tablet and services categories.
Restructuring charges in fiscal 20252026 were primarily comprised of adjustments to employee termination benefits related to previouslya planned organizational changeslabor and higher-than-expectedstore employeeoptimization retention associated with an enterprise-widerestructuring initiative that commenced in the fourthsecond quarter of fiscal 2024.2026 and a restructuring initiative focused on optimizing our Best Buy Health business that commenced in the first quarter of fiscal 2026. Refer to Note 2, Restructuring, of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for additional information.
TheGoodwill goodwilland impairmentintangible asset impairments in fiscal 20252026 waswere related to ourBest Buy Health. A change in Best Buy Health’s customer base during the third quarter of fiscal 2026 resulted in an impairment review of all Best Buy Health reporting unit.assets. The impairmentimpairments primarily arose fromreflect downward revisions of our revenue growth rates and margin rates compared to projectionsprevious usedprojections, in priorpart years.due to pressures in the Medicaid and Medicare Advantage markets. Refer to Note 3, Goodwill and Intangible Assets, of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for additional information.
Operating income rate decreasedincreased in fiscal 2025,2026, primarily due to thelower goodwill impairment and unfavorableintangible SG&Aasset rate,impairments, partially offset by favorability in the gross profit rate and lowerhigher restructuring charges.
Diluted EPS decreasedincreased in fiscal 2025,2026, primarily due to higher net earnings driven by lower operatinggoodwill income.and intangible asset impairments, partially offset by higher restructuring charges.
Revenue,In grossfiscal profit2026, rate,revenue SG&Achanges were primarily driven by our International segment, and operating income rate changes in fiscal 2025 were primarily driven by our Domestic segment. Gross profit rate and SG&A rate changes in fiscal 2026 were driven by both of our segments. For further discussion of our Domestic and International segments, see Segment Performance Summary, below.
(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. In fiscal 2026, weWe currently expect to reduceincrease our Domestic segment Best Buy store count by approximately 54 tostores 10by stores.the end of fiscal 2027.
In fiscal 2026, we closed select non-traditional Domestic and International store locations in conjunction with our restructuring initiative that commenced in the second quarter of fiscal 2026, with additional closures expected in fiscal 2027. See Note 2, Restructuring, of the Notes to Consolidated Financial Statements, included in this Annual Report on Form 10-K for additional information.
In fiscal 2024, we announced our collaboration with Bell Canada to rebrand 167 of its stores to Best Buy Express. These stores, previously part of The Source, a wholly owned subsidiary of Bell Canada, are leased by Bell Canada and therefore excluded from our store count. Under the arrangement, we provide the curated consumer electronics assortment and Geek Squad services, as well as supply chain, marketing and e-commerce support. Bell Canada is the exclusive telecommunications services provider and is also responsible for the store operations. By the end of fiscal 2025, all of the 167 stores have been rebranded.
Income tax expense decreased to $337 million in fiscal 2026 compared to $372 million in fiscal 2025. Our effective tax rate decreased to 24.0% in fiscal 2026 compared to 28.7% in fiscal 2025. The decreases were primarily due to the tax impacts of the restructuring charges and the associated exit of a component of our Best Buy Health business, as well as certain expenses that were not deductible in the prior year. The decrease in income tax expense was partially offset by the impact of increased pre-tax earnings. See Note 2, Restructuring, of the Notes to Consolidated Financial Statements, included in this Annual Report on Form 10-K for additional information.
Income tax expense decreased to $372 million in fiscal 2025 compared to $381 million in fiscal 2024, primarily due to the impact of decreased pre-tax earnings, partially offset by the impact of certain expenses that are not tax deductible. Our effective tax rate increased to 28.7% in fiscal 2025 compared to 23.5% in fiscal 2024, primarily due to the impacts of certain expenses that are not tax deductible and lower pre-tax earnings, partially offset by increased tax benefits from green energy incentives.
(2)Represents segment Adjusted SG&A and segment Adjusted operating income as reported in accordance with Accounting Standards Codification ("ASC") 280, Segment Reporting.
(2)Represents Domestic segment Adjusted SG&A and Domestic segment Adjusted operating income as reported in accordance with the adoption of Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. See Note 1, Summary of Significant Accounting Policies, and Note13, Segment and Geographic Information, of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for additional information.
Domestic segment revenue decreasedincreased slightly in fiscal 2025,2026, primarily driven by comparable sales declinesgrowth in appliancescomputing, gaming and homemobile theaterphones, and by the extra week of revenue totaling approximately $675 million in fiscal 2024. These decreases were partiallymostly offset by comparable sales growthdeclines in computing.home theater and appliances. Online revenue of $13.0$13.2 billion decreasedincreased 0.8%1.3% on a comparable basis in fiscal 2025.2026.
• Computing and Mobile Phones: The 3.4%5.7% comparable sales growth was driven primarily by computinglaptops, mobile phones and tablets.desktops.
• Consumer Electronics: The 5.2%5.4% comparable sales decline was driven primarily by home theater.
• Appliances: The 14.8%8.9% comparable sales decline was driven primarily by large appliances.
• Entertainment: The 11.9%6.8% comparable sales declinegrowth was driven primarily by gaming.gaming, partially offset by a comparable sales decline in drones.
• Services: The 8.4%1.0% comparable sales growth was driven primarily by growthBest Buy Marketplace and Best Buy Ads, partially offset by a comparable sales decline in our deliveryBest andBuy installationHealth services,service as well as our membership programs.offerings.
Domestic segment gross profit rate increased in fiscal 2025, primarily due to improved financial performance from our services category, including our membership offerings, partially offset by lower product margin rates and lower profit-sharing revenue from our private label and co-branded credit card arrangement.
Domestic segment adjusted SG&A decreased in fiscal 2025, primarily due to lower employee compensation expense, which was primarily store payroll, the impact of the 53rd week in fiscal 2024 and reduced vehicle rental costs. These decreases were partially offset by higher advertising and technology expense.
Domestic segment adjustedgross operating incomeprofit rate increasedremained effectively unchanged in fiscal 2025,2026, primarily due to alower favorableproduct grossmargin profitrates, rate, partiallymostly offset by higherrate advertisingimprovement within the services category and technology spend on lower sales, resultinggrowth in anBest unfavorableBuy SG&A rate.Ads.
Domestic segment adjusted SG&A decreased slightly in fiscal 2026, primarily due to lower Best Buy Health expenses, lower depreciation and favorable fiscal 2026 indirect tax resolutions, mostly offset by increased expenses in support of our Best Buy Ads and Best Buy Marketplace initiatives, including higher advertising and employee compensation expenses.
Domestic segment adjusted operating income rate increased slightly in fiscal 2026, primarily due to a favorable adjusted SG&A rate.
(1)Represents segment Adjusted SG&A and segment Adjusted operating income in accordance with ASC 280, Segment Reporting.
What changed in the latest 10-Q
Risk Factors
We could not find a separate Risk Factors item in the latest 10-Q. Some companies leave it out of quarterly reports; see the annual 10-K risk factors and the original filing. Open the filing on SEC.gov.
Management's Discussion & Analysis (MD&A)
Largest changes
Domestic segmentsee in full comparisonadjustedgrossSG&Aprofit rate increased in the firstquartersix months of fiscal 2027, primarily due tohighergrowthexpenses related to ourin Best Buy Marketplace and Best BuyAdsAds,initiatives,IEEPA tariff refunds of $34 million, lower supply chain costs andlappingimprovedafinancialfavorableperformanceindirectfromtaxoursettlementtraditionalreceivedservicesin the first quarter of fiscal 2026.offerings. These increases were partially offset by lowerBestproductBuymarginHealth expense.rates.
We recorded a reduction to restructuring charges in the second quarter and firstsee in full comparisonquartersix months of fiscal 2027, primarily related to subsequent adjustments for termination benefits associated withapreviouslylaborplannedandorganizationalstore optimization restructuring initiative that commenced in the second quarter of fiscal 2026.changes. Refer to Note 2, Restructuring, of the Notes to Consolidated Financial Statements for additional information.
“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. …”see in full comparison
“We continue to monitor developments with respect to tariffs and other trade policy matters closely, including impacts from the U.S. Supreme Court decision that ruled the tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were unauthorized. We are participating in the process established by the U.S. Customs and Border Protection for refunds of tariffs we paid as the importer of record under IEEPA. The timing and amount of refunds ultimately received is subject to ongoing legal and administrative uncertainty. …”see in full comparison
“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. …”see in full comparison
Income tax expense increased tosee in full comparison$102$116 million in thefirstsecond quarter of fiscal 2027 compared to$19$68 million in thefirstsecond quarter of fiscal 2026, primarily due tothe discrete tax impacts of the restructuring charges and the associated exit of a component of our Best Buy Health business in the prior year, as well ashigher pre-tax income. Effective tax rate (“ETR”) increased to26.9%27.1% in thefirstsecond quarter of fiscal 2027 compared to8.6%26.8% in thefirstsecond quarter of fiscal 2026, primarily due totheseprior-yeardiscretetaximpacts.benefitsSeefromNotethe2,restructuringRestructuring,charges and associated exit of a component of our Best Buy Health business, partially offset by theNotesimpacttoofCondensedhigherConsolidatedpre-taxFinancial Statements, included in this Quarterly Report on Form 10-Q for additional information.income.
Full comparison: every changed paragraph (65)
Unless the context otherwise requires, the use of the terms “Best Buy,” “we,” “usus,” “our” and the “ourcompany” refers to Best Buy Co., Inc. andand, as applicable, its consolidated subsidiaries. Any references to our website addresses do not constitute incorporation by reference of the information contained on the websites.
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 MayAugust 3,2, 2025, have been recast to conform with this reclassification.
•Entertainment - drones, gaming (including hardware, peripherals and certain software, as well as augmented realityAI glasses and trading cards), toys and virtual reality;
TariffsTariff 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.
We continue to monitor developments with respect to tariffs and other trade policy matters closely, including impacts from the U.S. Supreme Court decision that ruled the tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were unauthorized. We are participating in the process established by the U.S. Customs and Border Protection for refunds of tariffs we paid as the importer of record under IEEPA. The timing and amount of refunds ultimately received is subject to ongoing legal and administrative uncertainty. Accordingly, we did not recognize any amounts related to these refunds during the three months ended May 2, 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.
In the first quarter of fiscal 2027, we generated $8.9 billion in revenue and our comparable sales grew 2.0%, primarily driven by comparable sales growth in gaming, computing and mobile phones, partially offset by a comparable sales decline in major appliances. The comparable sales growth was due to a mix of new technology innovation, our continued focus on omni-channel customer experience and strong vendor partnerships.
We recorded a reduction to restructuring charges in the second quarter and first quartersix months of fiscal 2027, primarily related to subsequent adjustments for termination benefits associated with apreviously laborplanned andorganizational store optimization restructuring initiative that commenced in the second quarter of fiscal 2026.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 quartersix months of fiscal 2027, primarily due to lower restructuring charges.charges and favorable gross profit rates.
Diluted EPS increased in the second quarter and first quartersix 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 quartersix 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.
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 fourtwo stores by the end of fiscal 2027.
Income tax expense increased to $102$116 million in the firstsecond quarter of fiscal 2027 compared to $19$68 million in the firstsecond quarter of fiscal 2026, primarily due to the discrete tax impacts of the restructuring charges and the associated exit of a component of our Best Buy Health business in the prior year, as well as higher pre-tax income. Effective tax rate (“ETR”) increased to 26.9%27.1% in the firstsecond quarter of fiscal 2027 compared to 8.6%26.8% in the firstsecond quarter of fiscal 2026, primarily due to these prior-year discrete tax impacts.benefits Seefrom Notethe 2,restructuring Restructuring,charges and associated exit of a component of our Best Buy Health business, partially offset by the Notesimpact toof Condensedhigher Consolidatedpre-tax Financial Statements, included in this Quarterly Report on Form 10-Q for additional information.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.
(3)Adjusted SG&A as a % of revenue is calculated as Domestic segment Adjusted SG&A divided by Domestic segment Revenue.
(4)Adjusted operating income as a % of revenue is calculated as Domestic segment Adjusted operating income divided by Domestic segment Revenue.
Domestic segment revenue increased in the firstsecond quarter of fiscal 2027, primarily driven by comparable sales growth in gaming, computing, mobilehome phonestheater, AI glasses and services,trading cards. This growth was partially offset by a comparable sales decline in appliances. Online revenue of $2.6 billion in the firsttraditional quartergaming of fiscal 2027 increased 1.4% on a comparable basis.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.
(1) Revenue mix and comparable sales by revenue category for the three months ended MayAugust 3,2, 2025, have been recast to conform to the current presentation. See Revenue Category Reclassification, above, for additional information.
•Computing and Mobile Phones: The 4.2% comparableComparable sales growth was driven primarily by computingcomputing, tablets and mobile phones.
•Consumer Electronics: The 2.7% comparableComparable sales declinegrowth was driven primarily by home theater, headphones and portable speakers.theater.
•Appliances: The 13.6% comparableComparable sales declinegrowth was driven primarily by large appliances, partially offset by a comparable sales decline in small appliances.
•Services: The 5.5% comparableComparable sales growth was driven primarily by Best Buy Marketplace and creditwarranty card revenue.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.
•Entertainment: The 38.1% comparable sales growth was driven primarily by gaming.
Domestic segment gross profit rate increased in the firstsecond quarter of fiscal 2027, primarily due to growth in Best Buy Marketplace and Best Buy Ads, and improvedIEEPA financialtariff performancerefunds fromof our$34 traditional services offerings.million. These increases were primarilypartially offset by lower product margin rates.
Domestic segment adjustedgross SG&Aprofit rate increased in the first quartersix months of fiscal 2027, primarily due to highergrowth expenses related to ourin Best Buy Marketplace and Best Buy AdsAds, initiatives,IEEPA tariff refunds of $34 million, lower supply chain costs and lappingimproved afinancial favorableperformance indirectfrom taxour settlementtraditional receivedservices in the first quarter of fiscal 2026.offerings. These increases were partially offset by lower Bestproduct Buymargin Health expense.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 quartersix months of fiscal 2027, primarily due to a favorable gross profit rate.rates.
(2)Adjusted SG&A as a % of revenue is calculated as International segment Adjusted SG&A divided by International segment Revenue.
(3)Adjusted operating income as a % of revenue is calculated as International segment Adjusted operating income divided by International segment Revenue.
International segment revenue increaseddecreased in the firstsecond quarter of fiscal 2027, primarily driven by a comparable sales decline in gaming, partially offset by comparable sales growth ofin 4.7%mobile phones and the favorableunfavorable impact of foreign exchange rates. The comparable sales growth was primarily driven by mobile phones, gaming and digital imaging.
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.
(1)Revenue mix and comparable sales by revenue category for the three months ended MayAugust 3,2, 2025, have been recast to conform to the current presentation. See Revenue Category Reclassification, above, for additional information.
•Computing and Mobile Phones: The 6.4% comparable sales growth was driven primarily by mobile phones and computing.
•ConsumerComputing Electronicsand Mobile Phones: The 2.0% comparableComparable sales growth was driven primarily by digitalmobile imaging,phones, partially offset by a comparable sales decline in home theater.tablets.
•Appliances: The 8.3% comparable sales decline was driven primarily by large appliances.
•Services: The 2.5% comparable sales growth was driven primarily by growth in marketplace and our membership programs, partially offset by a comparable sales decline in digital content.
•EntertainmentConsumer Electronics: The 19.2% comparableComparable sales growth was driven primarily by gaming.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 decreasedincreased in the firstsecond quarter of fiscal 2027, primarily due to lowerimproved 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 firstsecond quarter of fiscal 2027, primarily due to higher advertising and depreciation expense, partially offset by the negativefavorable impact of foreign exchange rates and higher depreciation expense.rates.
International segment adjusted operating income rateSG&A increased in the first quartersix months of fiscal 2027, primarily due to increased leverage from higher salesdepreciation volumes,and whichadvertising resultedexpense, inas awell favorableas adjustedthe SG&Aunfavorable rate,impact largelyof foreign exchange rates. These increases were partially offset by anlower unfavorableemployee grosscompensation profit rate.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.
(2)Amounts for the three and six months ended MayAugust 2,1, 2026, primarily relatedrelate to subsequent adjustments to previously planned organizational changes. Amounts for the three and six months ended August 2, 2025, primarily relate to charges related to a labor and store optimization restructuring initiative that commenced in the second quarter of fiscal 2026.2026 Charges for the three months ended May 3, 2025, primarily related toand a restructuring initiative within our Best Buy Health business that commenced in the first quarter of fiscal 2026.
(3)Primarily represents the loss on disposal of a component of our Best Buy Health business.
The increases in cash and cash equivalents from January 31, 2026, and MayAugust 3,2, 2025, were primarily due to positive operating cash flows from operations, primarily driven by earnings, partially offset by dividend payments and capital expenditures.
The increase in cash provided by operating activities in the first quartersix months of fiscal 2027 was primarily driven by higher cash outflows from accounts payable in the prior year due to the timing and volume of inventory purchases and payments, and the timing of income tax payments.
The decrease in cash used in investing activities in the first quartersix months of fiscal 2027 was primarily driven by lowerthe capitaldisposal expenditures.of a component of our Best Buy Health business in the prior year.
The decrease in cash used in financing activities in the first quartersix months of fiscal 2027 was primarily driven by lower share repurchases.
We have a $1.25 billion five-year senior unsecured revolving credit facility agreement (the “Five-Year Facility Agreement”) with a syndicate of banks that expires in April 2030. There were no borrowings outstanding under the Five-Year Facility Agreement as of MayAugust 2,1, 2026, January 31, 2026, or MayAugust 3,2, 2025.
Our liquidity is also affected by restricted cash balances that are primarily restricted to coversupport obligations related to product protection plans provided under our membership offeringsofferings, self-insurance liabilities and self-insuranceamounts liabilities.held on behalf of third-party sellers on Best Buy Marketplace. Restricted cash, which is included in Other current assets on our Condensed Consolidated Balance Sheets, remainedwas relatively consistent at $287$279 million, $285 million and $288$257 million as of MayAugust 2,1, 2026, January 31, 2026, and MayAugust 3,2, 2025, respectively. The decrease in restricted cash from January 31, 2026, was primarily due to a lower balance to support product protection plan obligations. The increase in restricted cash from August 2, 2025, was primarily due to higher balances to support Best Buy Marketplace and self-insurance obligations, partially offset by a lower balance to support product protection plan obligations.
BBY insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 7 filings (3 insiders, 9 trade dates, 2,318,196 shares, about $189.7M; 1 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -2,318,196 (purchases minus sales); net value about -$189.7M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-23 | Scarlett Kathleen |
Option exercise | 96,166 | $70.50 | $6.8M |
| 2026-09-23 | Scarlett Kathleen |
Open-market sale | 27,952 | $92.41 | $2.6M |
| 2026-09-23 | Scarlett Kathleen |
Open-market sale | 88,110 | $92.07 | $8.1M |
| 2026-09-20 | Scarlett Kathleen |
Grant/award | 32,311 | — | — |
| 2026-09-16 | Schulze Richard M |
Gift | 300,000 | — | — |
| 2026-09-16 | Schulze Richard M |
Open-market sale | 247,340 | $92.43 | $22.9M |
| 2026-09-16 | Schulze Richard M |
Gift | 300,000 | — | — |
| 2026-09-16 | Schulze Richard M |
Open-market sale | 52,660 | $92.90 | $4.9M |
| 2026-08-20 | Bramman Anne L |
Grant/award | 14,581 | — | — |
| 2026-08-20 | Bramman Anne L |
Grant/award | 18,955 | — | — |
| 2026-07-20 | Watson Mathew |
Grant/award | 5,874 | — | — |
| 2026-07-14 | Schulze Richard M |
Open-market sale |
107,534 | $82.82 | $8.9M |
| 2026-07-14 | Schulze Richard M |
Open-market sale |
62,072 | $80.88 | $5.0M |
| 2026-07-14 | Schulze Richard M |
Open-market sale |
88,288 | $81.73 | $7.2M |
| 2026-07-14 | Schulze Richard M |
Open-market sale |
42,106 | $83.63 | $3.5M |
| 2026-07-13 | Schulze Richard M |
Open-market sale |
11,614 | $83.44 | $969.1K |
| 2026-07-13 | Schulze Richard M |
Open-market sale |
252,380 | $81.78 | $20.6M |
| 2026-07-13 | Schulze Richard M |
Open-market sale |
336,006 | $82.50 | $27.7M |
| 2026-07-07 | Hartman Todd G. |
Gift | 600 | — | — |
| 2026-06-26 | Schulze Richard M |
Open-market sale | 224,705 | $78.10 | $17.5M |
| 2026-06-25 | Schulze Richard M |
Open-market sale | 193,896 | $78.13 | $15.1M |
| 2026-06-16 | Schulze Richard M |
Open-market sale | 5,100 | $78.00 | $397.8K |
| 2026-06-15 | Schulze Richard M |
Open-market sale | 76,299 | $78.23 | $6.0M |
| 2026-06-12 | Whittington Melinda D |
Grant/award | 2,611 | — | — |
| 2026-06-12 | Sistani Sima |
Grant/award | 2,611 | — | — |
| 2026-06-12 | Rendle Steven E |
Grant/award | 2,611 | — | — |
| 2026-06-12 | Parham Richelle P |
Grant/award | 2,611 | — | — |
| 2026-06-12 | Munce Claudia F. |
Grant/award | 2,611 | — | — |
| 2026-06-12 | Mcloughlin Karen |
Grant/award | 2,611 | — | — |
| 2026-06-12 | Marte Mario Jesus |
Grant/award | 2,611 | — | — |
| 2026-06-12 | Kimbell David C |
Grant/award | 2,611 | — | — |
| 2026-06-12 | Kenny David W |
Grant/award | 4,330 | — | — |
| 2026-06-12 | Frank Meghan |
Grant/award | 2,611 | — | — |
| 2026-06-12 | Jadeja Ashok Jitendra Dylan |
Grant/award | 2,611 | — | — |
| 2026-06-12 | Caputo Lisa |
Grant/award | 2,611 | — | — |
| 2026-06-01 | Schulze Richard M |
Gift | 350 | — | — |
| 2026-06-01 | Schulze Richard M |
Gift | 350 | — | — |
| 2026-05-29 | Schulze Richard M |
Open-market sale | 191,572 | $75.96 | $14.6M |
| 2026-05-29 | Schulze Richard M |
Open-market sale | 147,868 | $76.96 | $11.4M |
| 2026-05-29 | Schulze Richard M |
Open-market sale | 27,132 | $77.69 | $2.1M |
| 2026-05-29 | Schulze Richard M |
Open-market sale | 133,778 | $75.09 | $10.0M |
| 2026-05-29 | Watson Mathew |
Open-market sale | 1,784 | $73.80 | $131.7K |
| 2026-04-15 | Schulze Richard M |
Gift | 1,252 | — | — |
| 2026-04-15 | Schulze Richard M |
Gift | 939 | — | — |
| 2026-04-15 | Schulze Richard M |
Gift | 20,975 | — | — |
Well-known investors holding BBY (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 3,805,827 | $288.8M | 0.1% | Reduced 38% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 3,335,494 | $253.1M | 0.15% | Added 477% |
| Millennium Management (Israel Englander) | 2026-06-30 | 1,241,617 | $94.2M | 0.06% | Added 116% |
| Renaissance Technologies | 2026-06-30 | 1,221,600 | $92.7M | 0.13% | Reduced 16% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 1,206,058 | $91.5M | 0.14% | New position |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 963,170 | $73.1M | 0.17% | Added 74% |
| D. E. Shaw & Co. | 2026-06-30 | 333,449 | $25.3M | 0.02% | Added 499% |
| Two Sigma Investments | 2026-06-30 | 72,919 | $5.5M | 0.0% | Reduced 21% |
| Bridgewater Associates | 2026-06-30 | 80,798 | $5.2M | — | Sold out |