How did big screen TV sales perform in Q4 given aggressive competition, and what are the growth opportunities for AI glasses, particularly with Meta and Google partnerships?

TV revenue and units were below expectations in Q4, but the company is optimistic for next year with new RGB technology driving demand. AI glasses are a significant growth trend, showing up in gaming, with strong vendor partnerships like Meta. They expect more products from existing and new partners in this category. “From a TV perspective, both revenue and units were below expectations in Q4 from an industry perspective. We were actually happy with the way that we showed up from a positioning perspective, but there just was a little bit more softness than expected.”

Has Best Buy embedded enough margin flexibility in its guidance for FY27, and is FY27 a transition year before returning to positive same-store sales growth, given persistent memory shortages and competitive landscape?

Management believes they have appropriately built in product rate pressure to remain competitive, noting that Ads and Marketplace provide fuel for reinvestment. They acknowledge the mixed macro environment but see innovation and replacement cycles as countervailing winds. They aim to maintain or grow market share in an industry that historically saw flat to single-digit growth. “I still believe over time, over the longer term, this is a great industry where, trust me, the world's biggest companies are innovating to bring incredible new products to market, especially with AI coming to life the way that it is.”

What factors underpin the expected acceleration in comparable sales from down 1% in February to approximately 1% for the full Q1 FY27?

The acceleration is attributed to the timing of tax refund spending, which is weighted towards March and April, and the shift of material phone launches from early February to early March. They also expect continued growth in computing, gaming, and mobile phones, along with improved TV trends. “First, we are -- as Corie talked about in our prepared remarks, we are expecting the benefit of tax refund spending. More of that is weighted towards the month of March and April for us than it is February.”

BBY

Best Buy (BBY) Q4 FY26 earnings call: guidance and Q&A

Earnings call· Jan 2026 (Q4 FY26)· Consumer Discretionary· Mar 3, 2026

Source: earnings call transcript

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

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

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

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

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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 billion	0.5%	—	20.5% gross profit rate

Product announcements

Product	Type	Timeline
OpenAI partnership for product catalog on ChatGPT	launch	this year (FY27)
Google Universal Commerce Protocol integration	launch	this year (FY27)
Wizard AI-powered commerce platform integration	launch	—
RGB technology for home theater	launch	middle of the year (FY27)
Smaller store model	expansion	FY27
Store refreshes and vendor experiences	expansion	this year (FY27)
Geek Squad services reassessment	update	this year (FY27)

Risks & headwinds

Mixed macro environment FY27

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 purchases FY27

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 uncertainty FY27

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 environment Q4 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 categories Q4 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 rate FY27

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 compensation FY27

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

Q1 FY27 Comparable Sales Growth

Q1 FY27

Current down 1% in February

Target approximately 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.

Find out whether BBY delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 7 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.