Best Buy 2026 Q2 Earnings Misses Targets as Net Income Dips 36%

Best Buy reported Q2 FY26 earnings that missed expectations, with a 34.8% decline in EPS and a 36.1% drop in net income. The company maintained its full-year guidance despite tariff uncertainties and mixed post-earnings stock performance.

Revenue
Best Buy’s total revenue rose 1.6% to $9.44 billion in Q2 FY26, driven by a 1.1% comparable sales increase in its domestic segment and 7.6% growth in its international segment. Computing and mobile phones led with $4.25 billion in revenue, while entertainment saw a notable 37.5% comparable sales gain. However, consumer electronics and appliances faced declines. Domestic online revenue grew 5.1% to $2.86 billion, representing 32.8% of total domestic sales. International revenue reached $740 million, fueled by new store openings in Canada and strong online performance.

Earnings/Net Income
The company’s earnings per share (EPS) fell 34.8% to $0.88, and net income dropped 36.1% to $186 million. The decline was attributed to lower product margin rates and restructuring charges. Despite better-than-expected sales growth, the lower gross profit margins and pressure from SG&A expenses led to an adjusted operating income rate of 3.9%, slightly below the prior year's 4.1%.

Price Action
The stock of Best Buy edged up 1.78% in the latest trading day, climbed 4.40% during the most recent full week, and surged 11.30% month-to-date. However, the strategy of buying BBY shares 30 days after the quarterly earnings report and holding for another 30 days has underperformed, with a CAGR of -4.73%, a maximum drawdown of 0.00%, and a Sharpe ratio of -0.13.

Post Earnings Price Action Review
The strategy of buying BBY shares 30 days after the quarterly earnings report and holding for another 30 days has yielded poor results. The strategy's CAGR is -4.73%, with a maximum drawdown of 0.00% and a Sharpe ratio of -0.13, indicating significant underperformance and risk. Despite short-term price gains, the long-term strategy has shown a negative return, raising concerns for investors relying on post-earnings momentum.

CEO Commentary
CEO Corie Barry highlighted a 1.6% comparable sales growth in Q2 FY26, the company’s highest in three years, driven by new technology innovation, a seamless omni-channel customer experience, and strong vendor partnerships. She emphasized momentum in back-to-school sales events and new initiatives like the Best Buy Marketplace. Barry expressed gratitude toward employees for their execution and customer service, signaling optimism about the second half of the year, while acknowledging challenges like potential tariff impacts on consumers and the business.

Guidance
Best Buy reiterates FY26 adjusted diluted EPS guidance of $6.15 to $6.30, revenue of $41.1 billion to $41.9 billion, and capital expenditures of approximately $700 million. CFO Matt Bilunas expects Q3 comparable sales growth similar to Q2, with an adjusted operating income rate near last year’s 3.7%, while maintaining caution amid tariff uncertainties, noting the company is trending toward the higher end of its sales guidance.

Additional News
Best Buy returned $266 million to shareholders in Q2 FY26 through dividends and share repurchases and announced a $0.95 per share quarterly dividend. The company also incurred $114 million in restructuring charges as part of an enterprise-wide initiative aimed at aligning resources with changing customer behaviors. Investors should also note the board’s authorization of $300 million in share repurchases for FY26, reinforcing its commitment to shareholder returns despite the challenging operating environment.