Best Buy Reports Strong Q2 Results with Raised Guidance Despite Declining Product Margins
Best Buy (BBY) reported stronger-than-expected fiscal second-quarter results, driven by a 4.1% increase in comparable sales and revenue of $9.78 billion, up 3.6% year-over-year. While enterprise gross margin improved to 23.9%, the gain was largely attributed to IEEPA tariff refunds ($34 million) rather than core product margins, which declined. The company raised its fiscal 2027 comparable-sales guidance from a potential decline of up to 1.0% to expected growth between 1.9% and 3.0%, with revenue now projected at $42.3 billion to $42.8 billion. Growth in Best Buy Ads and Marketplace helped offset the margin pressure, but these initiatives also increased adjusted SG&A expenses by nearly a percentage point of total revenue. Domestic online sales rose 5.1% to $3.00 billion, representing 33.1% of domestic revenue. However, international performance lagged with comparable sales down 1.8%, and operating margin falling from 2.4% to 1.8%. The company assumes similar tariff refunds in Q3 but acknowledges the need for Best Buy Ads and Marketplace to drive more sustainable long-term margin recovery.
Tickers: $BBY
Topics: comparable sales guidance gross margin improvement marketplace expansion revenue growth