Best Buy 2026 Q1 Earnings Misses Targets with Net Income Down 17.9%

Best Buy (BBY) reported its fiscal 2026 Q1 earnings on May 29th, 2025. Best Buy missed revenue expectations, reporting $8.77 billion compared to the anticipated $8.81 billion. Adjusted earnings per share of $1.15 exceeded analysts' projection of $1.09. The company adjusted its annual guidance, now expecting earnings per share between $6.15 and $6.30, down from the previous range of $6.20 to $6.60. This adjustment accounts for ongoing tariff impacts and unchanged consumer behavior trends.

Revenue

The total revenue for Best Buy in fiscal 2026 Q1 decreased by 0.9% to $8.77 billion, slightly lower than the $8.85 billion from the previous year. The computing and mobile phones segment generated $4.15 billion, while consumer electronics contributed $2.45 billion. Appliances accounted for $1.03 billion, followed by entertainment with $444.75 million. Services added $607.29 million, and other categories brought in $87.67 million, culminating in a total revenue of $8.77 billion.

Earnings/Net Income

Best Buy's earnings per share (EPS) declined by 16.7%, falling to $0.95 in fiscal 2026 Q1 from $1.14 in the previous year's Q1. The company's net income also saw a decrease, dropping to $202 million, representing a 17.9% decline from the $246 million reported in fiscal 2025 Q1. The EPS performance indicates a challenging quarter for profitability.

Price Action

The stock price of Best Buy edged down 3.00% during the latest trading day, dropped 5.46% during the most recent full trading week, and decreased 1.72% month-to-date.

Post-Earnings Price Action Review

The strategy of purchasing Best Buy shares following a quarter-over-quarter revenue decline on the earnings release date and holding for 30 days resulted in notably poor performance. The return was -17.47%, substantially underperforming the benchmark return of 39.33%, leading to an excess return of -56.80%. The compound annual growth rate (CAGR) was -6.26%, indicating considerable losses over the three-year period. This strategy also experienced a high maximum drawdown of -38.18%, and a Sharpe ratio of -0.17, reflecting significant risk and negative returns. Investors faced substantial challenges, with the strategy showing unfavorable outcomes compared to broader market benchmarks.

CEO Commentary

Corie Barry, Chief Executive Officer, expressed pride in the team's ability to navigate a dynamic macroeconomic environment, achieving profitability despite slightly lower revenue. She noted that comparable sales grew in computing, mobile phones, and tablets, while facing challenges in home theater and appliances, leading to a domestic comparable sales decline of 0.7%. Barry emphasized the importance of focusing on customer experience and maintaining strong vendor partnerships. She also highlighted the impact of current tariffs on product sourcing, adjusting assortments, and pricing strategies to remain competitive, while maintaining optimism about future growth in key product categories.

Guidance

Best Buy updated its annual outlook, guiding for revenue between $41.1 billion and $41.9 billion and adjusted earnings per share of $6.15 to $6.30. The company expects comparable sales to decline 1% to grow by 1% and an adjusted operating income rate around 4.2%. Capital expenditures are projected at approximately $700 million. The guidance assumes current tariff levels persist and no significant changes in consumer behavior from recent trends.

Additional News

Best Buy has announced plans to expand its store footprint with new locations set to open in key markets across the U.S. The retailer aims to enhance its omnichannel strategy by integrating more physical locations with its online platforms. Additionally, Best Buy has unveiled a strategic partnership with a major electronics manufacturer to boost its exclusive product offerings, anticipated to drive sales growth. On the corporate front, Best Buy declared a quarterly dividend of $0.95 per share payable on July 10, 2025, reflecting its commitment to returning value to shareholders despite market challenges.