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    BBY
    Earnings call· Jan 2026(Q4 FY26)

    BEST BUY CO Q4 FY26 earnings call BBY

    Mar 3, 2026 Source

    Executive summary

    Best Buy Q4 FY26 — Better-Than-Expected Profitability and New Profit Stream Momentum

    Best Buy navigated a mixed macro environment in Q4 FY26, delivering better-than-expected profitability despite a slight comparable sales decline. The company is focused on strengthening its omnichannel retail position while scaling new profit streams like Best Buy Ads and Marketplace, which are expected to drive future operating income expansion. Strategic initiatives include store refreshes, digital enhancements, and reassessing Geek Squad services, with FY27 anticipated to be a significant investment year for these growth drivers.

    Highlights

    6

    • Delivered adjusted operating income rate of 5% and adjusted EPS of $2.61 in Q4, both slightly up year-over-year.

    • Market share was at least flat in Q4, despite a softer consumer demand for the industry.

    • Achieved eighth consecutive quarter of positive comparable sales in computing and fourth consecutive quarter of growth in mobile phones.

    • Best Buy Ads and Marketplace delivered positive contributions to gross profit rate in Q4.

    • Relationship NPS was up materially year-over-year, reaching its highest point in 11 consecutive quarters.

    • Returned $1.1 billion to investors in FY26 through dividends and share repurchases, and increased quarterly dividend to $0.96 per share (1% increase), marking the 13th consecutive year of dividend raises.

    Concerns

    5

    • Q4 comparable sales were down 0.8% year-over-year, at the lower end of guidance.

    • Experienced softer-than-expected sales in November and early December, with sales negatively impacted by weather-induced store closures in the last week of the quarter.

    • The holiday promotional environment was even more aggressive than factored into planning.

    • Saw declines in home theater and appliances categories.

    • Anticipates increased demand for memory components driving cost inflation and supply uncertainty, particularly in computing, for FY27.

    Guidance & targets

    11
    CategoryTargetConfidence
    Full-year FY27 Revenue
    $41.2 billion to $42.1 billion
    high materiality
    High
    Full-year FY27 Comparable sales growth
    down 1% to up 1%
    high materiality
    High
    Full-year FY27 Adjusted operating income rate
    approximately 4.3% to 4.4%
    high materiality
    High
    Full-year FY27 Adjusted effective income tax rate
    approximately 25.5%
    medium materiality
    High
    Full-year FY27 Adjusted diluted earnings per share
    $6.30 to $6.60
    high materiality
    High
    Full-year FY27 Capital expenditures
    approximately $750 million
    medium materiality
    High
    Full-year FY27 Share repurchases
    approximately $300 million
    medium materiality
    High
    Q1 FY27 Comparable sales growth
    approximately 1%
    high materiality
    High
    Q1 FY27 Adjusted operating income rate
    approximately 3.9%
    medium materiality
    High
    Full-year FY27 Best Buy Ads growth
    approximately 10%
    medium materiality
    High
    Full-year FY27 Best Buy Business sales growth
    mid-single-digit sales growth rate
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Domestic
    Revenue decrease driven by comparable sales decline. Gross profit rate was flat to last year, benefiting from Best Buy Ads and Marketplace commissions, offset by lower product margin rates due to unfavorable sales mix and increased promotions. SG&A decreased $36 million, primarily due to reduced compensation expenses and lower Best Buy Health expenses, partially offset by increased expenses for Marketplace and Best Buy Ads.
    Comparable sales: -0.8%Online revenue: $4.9 billionOnline revenue comparable growth: -2.3%Online revenue as % of domestic revenue: 39%
    		$12.6 billion-1.1%—20.9% gross profit rate
    International
    Revenue increase primarily driven by favorable foreign exchange rates, partially offset by a comparable sales decline. Gross profit rate decreased 90 basis points primarily due to lower product margin rates.
    Comparable sales: -1.3%
    		$1.2 billion0.5%—20.5% gross profit rate

    Operational metrics

    17
    Adjusted operating income rate
    5%increased 10 basis points
    Q4 FY26

    Better than planned.

    Adjusted diluted earnings per share
    $2.61increased 1%
    Q4 FY26

    Better than planned.

    Enterprise revenue
    $13.8 billiondecreased 1%
    Q4 FY26
    Enterprise comparable sales
    -3%
    November
    Enterprise comparable sales
    0.2%
    December
    Enterprise comparable sales
    0.4%
    January
    Best Buy Ads gross advertising collections
    just over $900 millionup more than 7%
    FY26

    Shows up mostly as an offset to cost of goods sold with a small amount flowing through revenue.

    Best Buy Ads advertising partners
    750nearly doubling
    end of FY26

    Most growth stemmed from Marketplace third-party partners.

    Best Buy Ads first-party partners average annual investment growth
    16%year-over-year
    FY26
    Best Buy Ads on-site inventory mix
    just over 40%
    last year (FY26)

    Lower than many other retail media networks; on-site inventory drives higher margin.

    Marketplace domestic GMV
    approximately $300 million
    Q4 FY26

    Sales ramped through the back half of the year.

    Marketplace sellers
    over 1,100
    to date

    Over 90% of sellers with an open storefront are experiencing sales in any given week.

    Best Buy Business revenue
    more than $1.1 billion
    FY26

    Focuses on education, hospitality, builders, health care, and corporate enterprises.

    Total capital expenditures
    $704 millionessentially flat
    FY26

    Compared to fiscal '25.

    Online purchases fulfilled within 2 days
    70%fastest-ever fulfillment speeds
    Q4 FY26
    SG&A reduction from incentive compensation
    $100 million
    FY27

    Expected at the bottom end of the guidance range (minus 1% sales guide).

    Vendor-provided labor hours growth
    20%
    H2 FY26

    Expected to grow again in FY27.

    Industry KPIs

    5
    MetricValueDetails
    Comparable salesdown 0.8%%
    Store count growth6 new storesstores
    Gross margin drivers20.9%%
    Share buyback capital return$1.1 billionUSD
    Same sku like for like inflationapproximately flat

    Product announcements

    7
    ProductTypeDetails
    OpenAI partnership for product catalog on ChatGPTlaunch
    Google Universal Commerce Protocol integrationlaunch
    Wizard AI-powered commerce platform integrationlaunch
    RGB technology for home theaterlaunch
    Smaller store modelexpansion
    Store refreshes and vendor experiencesexpansion
    Geek Squad services reassessmentupdate

    Risks & headwinds

    7
    Mixed macro environmentFY27

    Comparable sales guidance of down 1% to up 1% for FY27

    Mitigation: Focus on value-focused consumers, strategic promotionality, and leveraging new profit streams.

    Consumer value focus and thoughtfulness on big-ticket purchasesFY27

    Not quantified, but stated as a key assumption for FY27.

    Mitigation: Attracting customers during sales moments, offering high-price point products for innovation or need, leveraging trade-ins, financing, refurbished products, and Geek Squad upgrades.

    Increased demand for memory components driving cost inflation and supply uncertaintyFY27

    Not explicitly quantified in dollars, but expected to impact computing category.

    Mitigation: Bringing in as much inventory as possible, providing longer forecasts to vendors, ensuring favorable business terms, specifying configurations to hit price points, narrowing assortments, and educating customers on purchase timing.

    Highly promotional environmentQ4 FY26, ongoing

    Q4 FY26 was "even a bit more promotional than we factored"

    Mitigation: Strategically pivoting marketing and promotionality, leveraging Best Buy Ads and Marketplace to fuel reinvestment, using personalized promotional levers, trade-ins, refurbished products, and financing.

    Declines in home theater and appliances categoriesQ4 FY26, ongoing

    Largest contributors to Q4 comparable sales decline.

    Mitigation: For home theater: extended store experiences, increased expert labor, national retail launch partner for new RGB technology. For appliances: investments in specialty labor, focus on delivery speed, core SKU availability, and vendor partnerships.

    Ongoing investments in Ads and Marketplace impacting operating income rateFY27

    Expected a "slight contribution" to operating income rate in FY27.

    Mitigation: FY27 is expected to be the last major investment year, with more material operating income rate contribution coming in FY28 and FY29.

    Higher incentive compensationFY27

    Expected to increase by $30 million compared to FY26 at the high end of revenue guidance.

    Mitigation: At the low end of guidance, plans to further reduce variable expenses, including incentive compensation, to align with sales trends (up to $100 million reduction).

    What to watch in Q1 FY27

    5

    Q1 FY27 Comparable Sales Growth

    Q1 FY27
    Currentdown 1% in February
    Targetapproximately 1% for the full quarter

    Why it matters

    This will indicate the effectiveness of tax refund spending and new phone launches in driving sales acceleration.

    We expect our first quarter comparable sales growth to be approximately 1%. From a monthly phasing📎 perspective, comparable sales were down approximately 1% in February and expected to increase in March and April.

    Q&A highlights

    6

    What is the potential impact of higher memory pricing on product margins, especially across different computing categories?

    Management expects the overall gross profit rate to improve by 30 basis points in FY27, driven by Ads and Marketplace, with product margin rates assumed to be flat. While there might be some pressure in specific computing categories due to memory costs, they expect to navigate this through various strategies, including offering products at different price points to match customer budgets.

    “So overall, pretty, pretty neutral impact to product margin rates in total, but there could be unique areas within computing that might have some impact.”

    asked by Unknown Analyst · answered by Matthew Bilunas

    3 min read7 chapters

    Detailed Narrative

    01

    Q4 Performance and Market Share

    Best Buy's Q4 FY26 comparable sales declined 0.8%, falling within the guidance range but reflecting softer consumer demand. Despite this, the company maintained at least flat market share. Sales patterns were unusual, with weakness in November and early December, followed by strong performance in the latter half of December and early January, before being impacted by weather-related store closures. The promotional environment was more intense than anticipated, but the team strategically adjusted marketing and promotional activities.

    02

    Product Category Trends and Innovation

    The company achieved its eighth consecutive quarter of positive comparable sales in computing and fourth consecutive quarter of growth in mobile phones. Emerging categories like AI glasses, 3D printers, collectibles, and PC gaming handhelds showed strong growth. These gains were offset by declines in home theater and appliances. Best Buy is planning for continued growth in computing due to replacement cycles, Windows 10 end-of-support, and AI innovation, and expects improved home theater sales with new RGB technology and enhanced store experiences.

    03

    Strategic Priorities and Investments

    Best Buy's multiyear strategy focuses on strengthening its omnichannel retail position and scaling new profit streams. Key priorities include driving omnichannel experiences, scaling Best Buy Ads and Marketplace, and achieving efficiencies to fund investments and offset pressures. FY27 is expected to be the last major investment year for Ads and Marketplace, with more material operating income rate contribution anticipated in FY28 and FY29.

    04

    Digital and AI Initiatives

    The company is actively integrating AI into its digital experience. Partnerships include OpenAI for product discovery on ChatGPT, Google for purchasing in AI mode via Universal Commerce Protocol, and Wizard for native checkout integration. Best Buy is evolving bestbuy.com to be agentic-friendly and focusing on customer recognition, personalization, app adoption, and online conversion for categories like major appliances and TVs.

    05

    Marketplace and Ads Momentum

    Best Buy Marketplace saw strong customer response, with domestic GMV reaching approximately $300 million in Q4. It has enlisted over 1,100 sellers, with over 90% experiencing weekly sales. Best Buy Ads generated over $900 million in gross advertising collections in FY26, up more than 7% year-over-year, and expects 10% growth in FY27. Both initiatives contributed positively to Q4 gross profit rate and are expected to continue doing so in FY27, despite ongoing technology and headcount investments.

    06

    Store Footprint and Services Evolution

    Best Buy plans to open 6 new smaller-format stores in FY27, marking its first domestic store growth in over a decade, while closing only 2. Store refreshes include moving computing to the center in 70 stores and allocating space to vendors like Meta or new concepts like Yardbird outdoor furniture. The company is reassessing Geek Squad services to simplify offerings and expand into experiential solutions, leveraging both agent support and digital/AI enhancements.

    07

    Navigating Memory Component Challenges

    The company is actively managing the impact of increased memory component demand, which is driving cost inflation and supply uncertainty in computing. Mitigation strategies include securing inventory, providing longer forecasts to vendors, ensuring favorable business terms, specifying configurations to match consumer budgets, narrowing assortments for better in-stocks, and educating customers on the value proposition of current purchases.

    AI-generated summary of the company’s earnings call. Not investment advice.