Best Buy Faces Margin Pressures Amid Promotional Landscape, Analyst Expects Q2 Earnings

Best Buy Co. shares are down 2.16% at $72.50 amid concerns over margin pressures. Analyst Robert F. Ohmes expects Q2 EPS of $1.23 and enterprise comps of -0.3%. He projects a 23.5% gross margin, unchanged from last year, and 45 basis points of SG&A deleverage. Appliance and consumer electronics sales remain highly promotional, with average discounts of 13% in Q2. However, the marketplace launch and retail media growth are expected to add incremental profit and be margin-accretive in FY26.

Best Buy Co. shares are down 2.16% at $72.50 amid concerns over margin pressures. Analyst Robert F. Ohmes expects Q2 EPS of $1.23 and enterprise comps of -0.3%. He projects a 23.5% gross margin, unchanged from last year, and 45 basis points of SG&A deleverage. Appliance and consumer electronics sales remain highly promotional, with average discounts of 13% in Q2. However, the marketplace launch and retail media growth are expected to add incremental profit and be margin-accretive in FY26 [1].

Best Buy Co., Inc. (NYSE:BBY) is expected to report its Q2 2025 earnings with a gross margin of 23.5%, unchanged from the previous year. Analyst Robert F. Ohmes predicts earnings per share (EPS) to be $1.23 and enterprise comps to be -0.3% [1]. The company's online sales are outperforming in-store purchases, which could exert pressure on margins. Appliance and consumer electronics sales remain highly promotional, with average discounts of 13% in Q2. Best Buy's strategic pivot towards the Best Buy Marketplace, launched via Mirakl in 2025, has significantly expanded its product offerings and integrated third-party sellers. This has doubled the online inventory and enabled in-store returns, positioning Best Buy as a diversified omnichannel platform [1]. Despite a 3.0% year-over-year revenue decline in Q2 2025, the company exceeded earnings expectations, with GAAP diluted EPS rising 7% to $1.34 and non-GAAP EPS up 10% [1]. The company's capital allocation strategy reinforces its commitment to shareholder value. In Q2 alone, Best Buy returned $301 million to shareholders through dividends and buybacks, with $500 million in repurchase authorization for FY25. This contrasts with the broader retail sector, where many companies are grappling with inventory gluts and declining foot traffic [1]. However, the consumer electronics sector is expected to contract by 2% in 2024, per Circana, and Best Buy's Q2 comparable sales decline of 2.3% highlights ongoing challenges [1]. The success of the Marketplace hinges on maintaining brand integrity and [1].

References:
[1] https://www.ainvest.com/news/buy-faces-margin-pressures-q2-earnings-2508/