Best Buy Co., Inc. Q2 FY2026 earnings call

• Q2 results: Revenue $9.4B, adjusted operating income rate 3.9%, adjusted EPS $1.28, comparable sales growth 1.6% (highest in 3 years). Driven by new tech innovation, omnichannel experience, vendor partnerships. Growth in gaming, computing, mobile phones, etc.; declines in home theater, appliances, etc. • Strategic priorities: - Omnichannel experiences: Amplify Meta partnership, launch new experiences in small appliances, expand home theater merchandising, improve mobile phone department model, enhance gaming and computing offerings. - Incremental profitability streams: Launch Best Buy marketplace with more products, expand Best Buy ads campaign. - Driving efficiencies: Modernize supply chain, implement new sourcing solution, evolve carrier strategy, automate distribution centers.

Domestic segment: Revenue increased 0.9% to $8.7 billion, driven by comparable sales growth of 1.1%. Domestic gross profit rate decreased 10 basis points to 23.4%. International segment: Revenue of $740 million increased 11.3% versus last year, primarily driven by comparable sales growth of 7.6% and revenue from Best Buy Express locations. International gross profit rate decreased 210 basis points to 21.8%.

• Maintaining annual guidance provided last quarter: revenue $41.1B-$41.9B, comparable sales -1% to +1%, adjusted operating income rate ~4.2%, adjusted EPS $6.15-$6.30, capital expenditures ~$700M. • Trending toward higher end of sales range. • Tariff impacts within previous guidance range due to mitigation efforts by vendors and Best Buy.

• Tariff uncertainties could impact product costs and financial results. • Consumer spending behavior and potential slowdown in business into holiday season. • Challenges in home theater and major appliance categories requiring continued efforts to stabilize.

Q: How did market share play out this quarter?

A: Feel better about share position this quarter, had good momentum in Q2 with flattish share overall, focusing on differentiating in gaming and computing.

Q: Talk about vendor labor investment up 20%?

A: Vendors investing across assets, including labor, physical space updates, associate training; important part of Best Buy's story with relevant traffic, expert service, and physical space.

Q: Risks around consumer and tariff price increases?

A: Mitigation strategies in place with vendors, cost increases lower than tariff rates; Q3 comps similar to Q2 with back-to-school sales and potential slowdown into holiday.

Q: Switch 2 performance and impact on guidance?

A: Exceeded sales expectations in Q2, gaming growth continues, Q4 expected to have gaming momentum but Q3 guide infers Q4 similar to Q3.

Q: Post Labor Day promotions and gross margin control?

A: Breadth and depth of promotions higher than last year, varies by vendor and product category, cost increases lower than overall tariff rate.

Q: Home theater and appliance challenges and investments?

A: Need to modify assortments, pricing, marketing, fulfillment; TVs focus on value and experiences, appliances focus on assortment and placement.

Q: Switch 2 performance relative to expectations and impact on back half?

A: Exceeded sales expectations in Q2, continues to drive gaming growth in back half.

Q: Windows 10 support expiration impact on computing?

A: Continued momentum in computing with 6 consecutive quarters of growth, Windows 10 end of life driving upgrades, MacBook upgrades, and AI features.

Q: Verizon/AT&T carrier system impact?

A: Expansion of operating model in stores, expected to drive momentum in mobile category in back half.

Q: Restructuring charges and future?

A: Restructuring charge in Q2 reflects resource shift, no material additional charges expected.

Q: Tariff sourcing and exposure?

A: U.S. plus Mexico ~25% with 0 tariffs, China ~30%-35% with mixed tariffs, other countries ~40%, blended effective rate ~16% vs previous estimates.

Q: Upgrade cycle sizing and impact on guidance?

A: Varies by category; computing has strong replacement/upgrade cycle, gaming launch dependent, TVs/appliances longer cycle; business shines with innovation.

Q: Rate tailwind impact on business?

A: Most impactful on appliances, with stronger correlation to housing turnover/housing starts leading to increased major appliance purchases.