Best Buy Puts Up Best Comp Growth in Three Years

Image Source: TradingView

By Brian Nelson, CFA

On August 28, Best Buy (BBY) reported better than expected second quarter results for fiscal 2026 with revenue and non-GAAP earnings per share coming in ahead of the consensus forecasts. Revenue grew to $9.44 billion from $9.29 billion in the year-ago period, with comparable store sales increasing 1.6%, lapping a 2.3% decline in last year’s quarter. Adjusted operating income margins fell 20 basis points to 3.9% from the same period a year ago, while adjusted diluted earnings per share came in at $1.28 versus $1.34 in last year’s quarter.

Management had the following to say about the results:

We delivered comparable sales growth of 1.6% in the second quarter, our highest growth in three years. This better-than-expected sales growth was driven by a mix of new technology innovation, our relentless focus on a seamless omni-channel customer experience and our strong vendor partnerships.

We have a busy and exciting second half of the year ahead of us with more tech innovation, new store experiences, and, of course, our newly launched Best Buy Marketplace. Our sales growth momentum has continued into August driven by strong customer response to our back-to-school sales events. I want to thank all our teams for their enthusiasm for technology, customer service passion and determined execution.

The sales growth resulted in a better-than-expected Q2 adjusted operating income rate. Our SG&A expense was as expected, and we saw some gross profit rate mix pressure from the strong growth in gaming and computing.

For Q3, we expect comparable sales growth to be similar to what we just delivered in Q2 and the adjusted operating income rate to be similar to last year’s Q3 3.7% rate. We feel good about our Q2 results and increasingly confident about our plans for the back half of the year. Given the uncertainty of potential tariff impacts in the back half, both on consumers overall as well as our business, we feel it is prudent to maintain the annual guidance we provided last quarter. At this point, we do believe we are trending toward the higher end of our sales range.

Looking to full year fiscal 2026 financial guidance, Best Buy expects revenue in the range of $41.1-$41.9 billion, with comparable sales of -1% to 1%. Its adjusted operating income rate is expected to be roughly 4.2%, while adjusted diluted earnings per share is targeted at $6.15-$6.30. Capital spending is anticipated to be roughly $700 million.

We liked that Best Buy put up its strongest comparable store sales growth in the past three years, with domestic comparable online sales growth of 5.1%, lapping a decline of 1.6% in last year’s quarter. As a percentage of total domestic revenue, online revenue now accounts for 32.8% versus 31.5% last year. For the six month period ended August 2, cash flow from operations was $783 million, while capital spending was $341 million, resulting in free cash flow of $442 million, higher than its cash dividends paid of $403 million over the same time period. Best Buy covers dividends paid while it boasts a net cash position on the balance sheet. Shares yield 5% at the time of this writing.

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