Best Buy Q1 Earnings Call Highlights
Key Points
- Interested in Best Buy Co., Inc.? Here are five stocks we like better.
- Best Buy beat Q1 expectations, with comparable sales up 2% and adjusted EPS up 11% to $1.28 on revenue of $8.9 billion. Management said the results topped its earlier outlook, helped by strength in gaming, computing and mobile.
- New profit streams are boosting margins, as Best Buy Ads and Marketplace both contributed positively to gross profit. Domestic Marketplace GMV was about $250 million in the quarter, and the company still expects full-year gross profit rate improvement of roughly 30 basis points.
- Best Buy kept its full-year guidance unchanged while outlining a major leadership transition and store strategy updates. Jason Bonfig will become CEO on Nov. 1, and the company plans to add smaller-format stores, expand Marketplace/partnerships, and launch RGB TVs in mid-June as a category catalyst.
Best Buy (NYSE:BBY) reported better-than-expected first-quarter fiscal 2027 results, with comparable sales rising 2% from a year earlier and adjusted earnings per share increasing 11%, executives said on the company’s earnings call.
CEO Corie Barry said the retailer generated revenue of $8.9 billion, an adjusted operating income rate of 4.1% and adjusted diluted earnings per share of $1.28. The results exceeded the company’s prior outlook for comparable sales growth of approximately 1%, according to Chief Financial and Strategy Officer Matt Bilunas.
“We are delivering on our strategy to strengthen our position in retail as a leading omni-channel destination for technology, while at the same time scaling new profit streams that we expect to provide considerable benefit over time,” Barry said.
Comparable Sales Improve as Gaming, Computing and Mobile Grow
Bilunas said enterprise revenue increased 1.9% from last year, while domestic revenue rose 1.5% to $8.2 billion, driven by comparable sales growth of 1.8%. International revenue increased 7% to $687 million, helped by comparable sales growth of 4.7% and foreign exchange benefits.
In the domestic business, the largest contributors to comparable sales growth were gaming, computing, mobile phones and services, partially offset by a decline in appliances, Bilunas said.
Barry said gaming sales were stronger than expected across the three major consoles, citing Switch 2, PS5 and Xbox, and demand for software titles including “Pokémon Pokopia.” She also said sales doubled in a group of newer and emerging categories, including AI glasses, 3D printers, collectibles such as trading cards, health rings and PC gaming handhelds.
Computing posted its ninth consecutive quarter of positive comparable sales, Barry said, supported by upgrade and replacement demand and product innovation. Best Buy’s business team grew 15% overall, with strength among education, corporate and healthcare clients. Mobile phones posted a fifth consecutive quarter of growth, helped by expanded carrier partnerships and improvements to the in-store operating model.
The home theater category showed “material improvement” in TV trends, Barry said. Although TV sales were still down slightly from last year, she said the company saw unit growth and market share gains during the quarter.
Marketplace and Ads Add to Gross Profit
Best Buy’s newer profit streams remained a key focus of the call. Barry said Best Buy Ads and Marketplace both exceeded performance targets and delivered another quarter of positive contribution to gross profit rates. Domestic Marketplace gross merchandise value reached approximately $250 million in the first quarter, she said. Including Marketplace GMV, domestic sales growth was more than 4%.
Bilunas said the domestic gross profit rate increased 20 basis points to 23.7%, driven by Marketplace and Best Buy Ads growth and improved performance from traditional services offerings. Those benefits were largely offset by lower product margin rates. International gross profit rate declined 50 basis points to 21.5%, primarily due to lower product margin rates.
For the full year, Bilunas said Best Buy continues to expect gross profit rate improvement of approximately 30 basis points, driven by Best Buy Ads and U.S. Marketplace growth. He said ad collections are expected to grow 10% to nearly $1 billion, while U.S. Marketplace GMV is expected to be at least $1.2 billion for the year.
Best Buy Maintains Full-Year Guidance
Best Buy maintained its full-year fiscal 2027 guidance. The company continues to expect:
- Revenue of $41.2 billion to $42.1 billion.
- Comparable sales ranging from down 1% to up 1%.
- Adjusted operating income rate of 4.3% to 4.4%.
- Adjusted diluted earnings per share of $6.30 to $6.60.
- Capital expenditures of approximately $750 million.
- Share repurchases of approximately $300 million.
Bilunas said comparable sales improved through the first quarter, declining approximately 1% in February before growing 3% in March and 4% in April. For the second quarter, the company expects comparable sales growth of approximately 1% and an operating income rate of about 3.9%, flat to last year.
Comparable sales were up high single digits month-to-date in May through Memorial Day, Bilunas said, with strength across most categories. However, he said Best Buy will begin lapping a successful gaming launch from last year in June, which represented roughly $200 million in second-quarter sales. He also noted that the company will begin lapping stronger back-to-school and Windows 10-related computing sales later in the quarter.
Leadership Transition and Strategic Priorities
Barry addressed the company’s previously announced CEO succession plan, saying she decided it was the right time to step aside. Jason Bonfig, currently chief customer, product and fulfillment officer, will become CEO on Nov. 1. Barry said the two are working together on the transition.
Bonfig outlined four priorities for the company: advancing Best Buy as a retail, media, advertising and technology company; expanding reach through Marketplace and partnerships; elevating the customer experience; and remaining a human-powered, customer-focused company.
Bonfig said Best Buy will begin adding medium and small-format stores this summer. Medium-format locations are expected to range from 20,000 to 25,000 square feet, while small-format locations are expected to be 12,000 to 15,000 square feet. He said these stores are intended to expand the company’s reach rather than replace larger stores.
In larger stores, Bonfig said Best Buy is consolidating empty space in approximately 70 locations. In 50 stores, the space will be used for a new “Meta at Best Buy” experience spanning AI glasses and virtual reality. In the other 20 stores, Best Buy will use the space for Yardbird outdoor furniture shops or outlet assortments, depending on the location.
TV Launch, Appliances and Membership Updates
Best Buy executives highlighted the upcoming launch of RGB televisions as a potential catalyst for the home theater category. Bonfig said some RGB TVs are already on display in stores and online, with the full assortment expected to launch in mid-June. For the next year, Best Buy will be the only national retailer where customers can shop, experience and buy the technology, he said.
Bonfig also said the company is taking action to improve appliance sales, which have been pressured by a stagnant housing market and competitive retail environment. He cited investments in pricing, marketing, product availability and delivery speed, and said the company had already seen month-to-date growth in demand versus last year.
Best Buy is also adding rewards points for 8 million paid members. Beginning next week, My Best Buy Plus and My Best Buy Total members will earn 1% back in rewards on eligible purchases and 6% back when using the My Best Buy credit card, Bonfig said.
The company ended the quarter with inventory up nearly 8% and accounts payable up nearly 10% from last year. Bilunas said the higher inventory balance primarily reflected a pull-forward of computing products, as Best Buy seeks to manage expected memory cost increases. Bonfig said the company does not currently see indications of material inventory supply constraints for the rest of fiscal 2027.
About Best Buy (NYSE:BBY)
Best Buy Co, Inc is a leading North American consumer electronics retailer that sells a broad range of products including computers, mobile phones, televisions and home theater systems, major appliances, smart-home devices, gaming hardware and software, wearables and related accessories. The company operates through a mix of large-format stores, smaller specialty locations and an e-commerce platform, offering national and private-brand merchandise from major consumer-technology manufacturers as well as third-party sellers.
Beyond product retailing, Best Buy provides a suite of services aimed at installation, repair and ongoing technical support.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].
Where Should You Invest $1,000 Right Now?
Before you make your next trade, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now...
Source MarketBeat
