Best Buy Co. Inc.
Best Buy reported adjusted earnings of $1.47 per share, beating the consensus estimate of $1.38.
Sales increased 3.6% year over year to $9.78 billion, topping the $9.59 billion estimate.
Comparable sales rose 4.1%, well above the company's guidance for roughly 1% growth. Computing led comparable sales growth for the 10th consecutive quarter, supported by upgrades, replacements and new products. Best Buy Business sales jumped 21%.
Adjusted operating margin expanded about 40 basis points to 4.3%. A $34 million tariff refund supported gross and operating margins.
Business Performance
Domestic revenue increased 4.3% to $9.07 billion, driven by 4.5% comparable sales growth. Computing, home theater and emerging categories such as artificial intelligence glasses and trading cards led the gains.
Domestic online revenue rose 5.1% on a comparable basis to $3 billion. Online sales represented 33.1% of domestic revenue, up from 32.8% a year earlier.
International revenue fell 4.2% to $709 million, mainly due to a 1.8% comparable sales decline and unfavorable currency movements.
Home theater delivered its strongest growth since the second quarter of fiscal 2022, with domestic television sales climbing more than 10%. Sales from emerging categories, including AI glasses, trading cards and health rings, more than doubled.
Mobile phone sales grew for the sixth consecutive quarter. Major appliance sales edged higher, while traditional gaming sales declined as Best Buy lapped the successful launch of Nintendo's Switch 2.
During the earnings call, CEO Corie Barry said consumers remain willing to spend but continue to seek value and gravitate toward sales events. Shoppers are still cautious about big-ticket purchases, she said, though they will pay higher prices when replacing essential products or buying compelling new technology.
AI, Marketplace And Membership Growth
U.S. Marketplace gross merchandise value totaled about $300 million during the quarter. Best Buy expects full-year GMV of $1.3 billion.
The retailer has completed more than half of its 50 planned Meta Labs locations. Each location covers about 900 square feet and features trained employees focused on Meta's ecosystem, including AI glasses and virtual reality products.
Best Buy also launched AskBlue, a conversational AI shopping and support assistant. In addition, the company completed its OpenAI commerce integration, allowing customers to discover products, receive recommendations and make purchases through ChatGPT.
Paid My Best Buy Plus and Total memberships are expected to increase from just over 8 million in February to about 9 million by year-end.
Outlook Raised
Best Buy raised its fiscal 2027 adjusted earnings outlook to $6.70 to $6.90 per share, up from $6.30 to $6.60. The revised range also topped the $6.58 consensus estimate.
The company increased its sales forecast to $42.3 billion to $42.8 billion from $41.2 billion to $42.1 billion. Analysts expect sales of $42.06 billion.
Best Buy now projects comparable sales growth of 1.9% to 3%, compared with its previous outlook ranging from a 1% decline to 1% growth. It expects gross margin to improve by 30 to 40 basis points.
Best Buy Ads is expected to grow 10% this year after generating $900 million in collections last year.
For the third quarter, the company expects comparable sales growth of 1% to 3%, with August trends tracking near the upper end of that range.
Management said the expected release of "Grand Theft Auto VI" could support software and hardware sales in the fourth quarter. However, higher memory prices continued to flow through the company's product assortment during the second quarter.
BBY Price Action: Best Buy shares were down 4.22% at $83.75 at the time of publication on Thursday, according to Benzinga Pro data.
