Best Buy 2026 Q1 Earnings Misses Targets as Net Income Declines 17.9%

Best Buy (BBY) reported its fiscal 2026 Q1 earnings on June 6th, 2025. The company missed analyst expectations with a 0.9% decrease in total revenue to $8.77 billion compared to $8.85 billion in Q1 2025. Adjusted diluted EPS was reported at $0.95, lower than the prior year's $1.14. Best Buy has updated its fiscal year 2026 guidance to reflect the impact of tariffs, predicting annual comparable sales growth to range from down 1% to up 1% and maintaining its adjusted operating income rate at approximately 4.2%.

Revenue

During the first quarter of fiscal 2026, Best Buy's total revenue decreased by 0.9% to $8.77 billion. The computing and mobile phones segment saw revenues of $4.12 billion, contrasting with $4.15 billion from the previous year. Consumer electronics contributed $2.41 billion, down from $2.45 billion. Appliances generated $1.03 billion, compared to $1.06 billion. The entertainment category brought in $444.75 million, a decrease from $491 million. Services accounted for $607.29 million, down from $616 million, while other segments added $87.67 million, previously at $76 million.

Earnings/Net Income

Best Buy's earnings per share (EPS) declined 16.7% to $0.95 in Q1 2026 from $1.14 in Q1 2025. The company's net income fell to $202 million, marking a 17.9% drop from $246 million in the previous year. The decrease in EPS and net income reflects a challenging financial performance.

Post-Earnings Price Action Review

The strategy of buying BBY shares after a revenue miss and holding for 30 days resulted in a poor performance, yielding a return of -9.26%, which significantly underperformed the benchmark return of 85.73%. The strategy also demonstrated high risk with a Sharpe ratio of -0.05 and a maximum drawdown of -54.81%. These figures underscore the volatility and potential pitfalls of investing without robust risk management strategies. The considerable underperformance compared to the benchmark highlights the need for investors to reassess their approach and consider alternative strategies that better align with the current market dynamics. The high risk associated with the strategy emphasizes the importance of thoroughly evaluating market conditions and incorporating comprehensive risk management practices to mitigate potential losses during volatile periods.

CEO Commentary

“I’m proud of how our teams have been navigating the environment and planning our business within dynamic macroeconomic conditions,” said Corie Barry, Best Buy CEO. “Against this backdrop, we executed well in Q1 and delivered in-line revenue and better-than-expected adjusted operating income. We remain focused on our FY26 strategic priorities, which include driving omni-channel experience improvements that resonate with our customers, launching and scaling incremental profit streams, including Best Buy Marketplace and Best Buy Ads, and enhancing operational effectiveness to fund strategic investments and offset pressures.”

Guidance

Best Buy’s updated guidance for FY26 includes expected revenue of $41.1 billion to $41.9 billion, comparable sales growth of (1.0%) to 1.0%, and an adjusted operating income rate of approximately 4.2%. The adjusted effective income tax rate is projected to be around 25.0%, with adjusted diluted EPS anticipated to be between $6.15 and $6.30.

Additional News

In recent weeks, Best Buy announced a 1% increase in its quarterly dividend to $0.95 per share, reflecting confidence in future cash flow generation despite revenue challenges. The company is also set to launch its U.S. third-party marketplace feature by mid-year, aiming to enhance its product assortment without owning inventory. This move is anticipated to generate commission and advertising revenue. Moreover, Best Buy is focusing on expanding its retail media network, Best Buy Ads, by investing in technology and forming new partnerships to drive growth beyond merchandise vendors, indicating a strategic pivot towards diversifying revenue streams in a competitive market landscape.