The companies on the Global 500 employ 70.2 million people, and their revenue represents more than one-third of the world’s GDP.

Fortune Global 500

With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

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The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

World's Most Admired Companies

The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are automotive retail, general merchandisers, internet retail, and specialty retail.

Fortune Sector Leaders: Retailing

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

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The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

F500-2023-094-Best Buy

The electronics retailer with more than 900 stores nationwide struggled through a difficult year, falling 26 spots on this year’s Fortune 500 list. 
<ul> 
 	<li>Revenue fell 11% to $46 billion and profit fell 42% to $1.4 billion.</li> 
 	<li>The company is predicting that customers will soon repair or upgrade all the home devices they bought during the pandemic, leading to an uptick in revenue.</li> 
 	<li>Best Buy laid off hundreds of in-store employees in April 2023 in what the company called a rethinking of its retail experience as more shopping moves online.</li> 
 	<li>The company had 90,000 workers in the U.S. and Canada as of January 2023, down from nearly 125,000 workers in early 2020.</li> 
 	<li>CEO Corie Barry is one of 52 female CEOs leading Fortune 500 companies.</li> 
</ul>

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

Fortune collaborated with the Diligent Institute to rank the most innovative boards of directors among S&P 500.

Modern Boards 2022 Best Buy

Best Buy’s board includes three former CEOs and four active CEOs, including its own chief, Corie Barry, as well as David Kenny (Nielsen), Steve Rendle (VF Corp.), and Eugene Woods (Atrium Health). Best Buy scored high on board size, its CEO succession plan, and senior independent nonexecutive director representation. 
 
Other notable names among its directors include Karen McLoughlin, former CFO of Cognizant Technology Solutions, and Mario Marte, current CFO of Chewy.  
 
Best Buy reported sales of $51.7 billion in the fiscal year ended January 2022, registering double-digit sales growth even as it grappled with the COVID pandemic, inflation, and supply-chain shortages.

Fortune Modern Board 25

This year’s Fortune 500 marks the 68th running of the list.

F500-2022-068-Best Buy

Best Buy was able to post record-high revenues and earnings in 2021, though the road ahead for the consumer electronics retailer isn’t necessarily smooth. Fourth-quarter 2021 sales declined year over year in the U.S. as supply-chain issues and the continuing decline in popularity of in-person shopping dogged the company. More than 20 brick-and-mortar Best Buy stores closed last year, and more are expected to shut down in 2022. Still, Best Buy has had success in expanding its e-commerce and online shopping offerings; nearly 40% of the company’s domestic revenue now comes from e-commerce.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

G500-2021-238-Best Buy

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;As screen time soared in 2020, so did Best Buy. Revenue at the electronics retailer rose 8.3% to $47 billion in 2020 compared with the prior year—enough to push the company up nine spots on the Fortune 500 list this year. Profit, meanwhile, climbed a hefty 16.7%. The good news came, in part, from the work-from-home revolution, as newly remote workers stocked up on home office equipment and other technology. But it's not rosy for everyone at Best Buy. The retailer expects online shopping to account for 40% of sales next year compared to just 19% two years earlier—which prompted the company to announce store closures and 5,000 layoffs in early 2021. &quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:11}">As screen time soared in 2020, so did Best Buy. Revenue at the electronics retailer rose 8.3% to $47 billion in 2020 compared with the prior year—enough to push the company up 37 spots on the Global 500 list this year. Profit, meanwhile, climbed a hefty 16.7%. The good news came, in part, from the work-from-home revolution, as newly remote workers stocked up on home office equipment and other technology. But it's not rosy for everyone at Best Buy. The retailer expects online shopping to account for 40% of sales next year compared to just 19% two years earlier—which prompted the company to announce store closures and 5,000 layoffs in early 2021.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-66-Best Buy

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;As screen time soared in 2020, so did Best Buy. Revenue at the electronics retailer rose 8.3% to $47 billion in 2020 compared with the prior year—enough to push the company up nine spots on the Fortune 500 list this year. Profit, meanwhile, climbed a hefty 16.7%. The good news came, in part, from the work-from-home revolution, as newly remote workers stocked up on home office equipment and other technology. But it's not rosy for everyone at Best Buy. The retailer expects online shopping to account for 40% of sales next year compared to just 19% two years earlier—which prompted the company to announce store closures and 5,000 layoffs in early 2021. &quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:11}">As screen time soared in 2020, so did Best Buy. Revenue at the electronics retailer rose 8.3% to $47 billion in 2020 compared with the prior year—enough to push the company up nine spots on the Fortune 500 list this year. Profit, meanwhile, climbed a hefty 16.7%. The good news came, in part, from the work-from-home revolution, as newly remote workers stocked up on home office equipment and other technology. But it's not rosy for everyone at Best Buy. The retailer expects online shopping to account for 40% of sales next year compared to just 19% two years earlier—which prompted the company to announce store closures and 5,000 layoffs in early 2021.

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-275-Best Buy

Corie Barry, who became CEO of the retailer in June 2019, oversaw a rise in online sales during her first year in the job: Digital orders accounted for nearly 20% of the company’s $43.6 billion in revenue last year. But after frenetic consumer demand in March—as the newly self-isolated stocked up on laptops, refrigerators, and devices that could be used for remote learning—Best Buy, like most retailers, began feeling the sting of the pandemic. The 54-year-old chain in April furloughed 51,000 of its 125,000 employees, including nearly all part-time workers.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-075-Best-Buy

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Change the World

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This year's Fortune 500 marks the 64th running of the list.

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This year's Fortune 500 marks the 63rd running of the list.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 62nd running of the list.

The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Best Buy is an electronics products retailer that also offers delivery, installation, technical support, repair, and warranty services. Its portfolio includes computers, mobile phones, smart watches, televisions, entertainment products, sporting goods, and appliances such as refrigerators and dishwashers.

Q2 2027

Q1 2027

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Q2 2026

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Q4 2025

Q3 2025

Best Buy (BBY): Company Profile, Stock Price, News, Rankings

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Ladies and gentlemen, thank you for standing by. Welcome to Best Buy's First Quarter Fiscal twenty twenty six Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. At that time, if you have a question, you will need to press star one on your phone.

If you choose to be taken out of the question queue, please press star one again. As a reminder, this call is being I will now turn the conference call over to Molly O'Brien, Head of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Joining me on the call today are Corey Barry, our CEO Matt Palunis, our CFO and Jason Bonfig, our Senior Executive Vice President of Customer Offering and Fulfillment. During the call today, we will be discussing both GAAP and non GAAP financial measures. A reconciliation of these non GAAP measures to the most directly comparable GAAP financial measures and an explanation of why these non GAAP financial measures are useful can be found in this morning's earnings release, which is available on our website investors.bestbuy.com. Some of the statements we will make today are considered forward looking within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements may address the financial condition, business initiatives, growth plans, investments and expected performance of the company and are subject to risks and uncertainties that could cause actual results to differ materially from such forward looking statements. Please refer to the company's current earnings release and our most recent Form 10 ks and subsequent Form 10 Qs for more information on these risks and uncertainties. The company undertakes no obligation to update or revise any forward looking statements to reflect events or circumstances that may arise after the date of this call. And now I will turn the call over to Corie.

and thank you for joining us. It has certainly been an eventful start to the year. I'm proud of how our teams have been navigating the environment and planning our business against the backdrop of dynamic macroeconomic factors. They've employed a calm, strategic and steadfast approach with their ultimate focus on our customers and the partnerships we have with our vendors. Against this backdrop, we executed well in Q1 and delivered better than expected profitability.

Today, we are reporting first quarter revenue that was slightly below last year as expected and adjusted operating income rate that was flat year over year. On revenue of $8,800,000,000 we delivered an adjusted operating income rate of 3.8% and an adjusted earnings per share of $1.15 From a product category perspective, we drove comparable sales growth in computing, mobile phones and tablets. This growth was offset by declines in home theater, appliances and drones, resulting in a domestic comparable sales decline of 0.7%. We delivered 6% comparable sales growth in the combined computing and tablet categories. Our omni channel operations provided strong support for our Q1 online sales, which grew year over year for the second consecutive quarter.

They were nearly 32% of total domestic sales, a slightly higher mix than last year. Almost 60% of online purchases are delivered or available for pickup within one day, and we drove our strongest on time ship to home delivery performance in three years. For the most part, customer behavior in Q1 did not change materially from the commentary we have shared for the past several quarters. Customers continued to be deal focused and attracted to more predictable sales moments. We believe the consumer has remained resilient while dealing with persistent inflation, making them value focused and thoughtful about big ticket purchases.

We also still see a customer that is willing to spend on high price point products when they need to or when there's technology innovation. Additionally, we continue to see material year over year improvement in our domestic relationship net promoter score, which tracks consumers' likelihood to recommend Best Buy during the quarter. We believe this is the direct result of our relentless focus on elevating our unique customer experience. I am excited to discuss the progress we have made in Q1 on our fiscal twenty twenty six strategic priorities. But first, we must address the current tariff environment impacting our industry, our business and consumers overall.

Let me begin by saying there were some developments overnight that may have future impacts. We are obviously not addressing these in our following prepared remarks as there remains a great deal of uncertainty. As we stressed last quarter, international trade is critically important for our business and industry. The consumer electronics supply chain is highly global, technical and complex. There have been a lot of developments since our March conference call.

While China remains the number one source for products we sell, we currently estimate the percentage of product COGS it represents is approximately 30% to 35% compared to the 55% metric we shared in March. This is the result of vendors using production capabilities in multiple countries and leveraging their ability to flex sourcing options as the environment evolves. We estimate that the combination of The United States and Mexico are approximately 25% of product COGS at this point. The level of tariff currently varies across our product categories. Let me provide a high level breakdown.

The consumer electronics products that are coming from Mexico, including televisions and major appliances, are compliant with the USMCA trade agreement and are not subject to tariffs. As it relates to China, there are currently two distinct tariff scenarios. First, categories that are subject to the Section two thirty two semiconductor investigation, including computers, mobile phones, networking and monitors are currently subject to the 20% fentanyl tariff. Roughly half our China COGS falls into this scenario. Second, categories like major and small appliances, gaming consoles, furniture, and accessories are subject to the 20% fentanyl tariff plus the recently instituted 10% baseline tariff.

Finally, consumer electronics products coming from countries such as Vietnam, India, South Korea, and Taiwan are currently subject to 10% tariff. We have been actively employing many tactics in partnership with our vendors as we navigate the dynamic situation and work to mitigate the impacts of tariffs on our customers and business. I would organize them into five main themes. These include, one, leveraging manufacturing flexibility. Since 02/2018, many vendors, including our own exclusive brands, have created new manufacturing locations that provide optionality two, negotiating costs, including consolidating volume into fewer partners for leverage in negotiations three, increasing country diversification.

We influence many of our partners to start or continue building resiliency into their supply chains by ensuring there are at least two locations available to manufacture the same or similar products for distribution across the globe. Four, adjusting assortments. We review and modify assortments to ensure a wide range of customer needs and budgets are met and rationalize where appropriate to consolidate volume. And five, as a last review, we adjust prices as tariff related inventory cost changes are implemented. As a reminder, Best Buy only directly imports approximately 2% to 3% of our overall assortment.

I want to make the point that due to mitigation efforts by both vendors and by Best Buy, the increased product costs that are flowing to us are lower than the tariff rates. And as of mid May, we have already made the related price and promotional adjustments to our assortment. I also want to stress that as always, we are committed to offering competitive prices to our customers. From an inventory perspective, we have continued with our long standing strategy of targeting roughly sixty days of forward supply. At this point in time, we feel good about inventory levels overall and for back to school.

I am grateful to our deeply tenured and talented teams for their skill in operating through volatile conditions and for their deep partnerships with our vendors. As we look to the rest of the year, there is still uncertainty related to tariff levels, timing and countries involved in addition to the potential actions of others in the industry as well as the potential reaction of American consumers. However, based on the current tariff levels we just articulated, we are updating our annual outlook with our best view at this time. We are lowering our full year comparable sales range to down 1% to up 1% and expect an adjusted operating income rate that is consistent with last year or approximately 4.2%. Our underlying working assumptions are that tariffs stay at the current levels for the rest of the year and there is no material change in consumer behavior from the trends we have seen in very recent quarters.

As you can imagine and based on our history, we will continue to scenario plan and adjust with agility as the situation evolves. Matt will provide more detail. Now I would like to update you on the progress we are making on our strategic priorities. Our strategy is to continue to strengthen our position in retail as the leading omnichannel destination for technology, while at the same time building and scaling new profit streams that we believe will drive returns in the future. As a reminder, our fiscal twenty six strategic priorities are as follows.

One, drive omnichannel experience improvements that resonate with our customers. Two, launch and scale incremental profit streams, including Best Buy Marketplace and Best Buy Ads and three, drive operational effectiveness and efficiency to fund strategic investments and offset pressures. Of course, these priorities are intertwined and work together as a great customer experience drives the level of opportunity to generate incremental profit streams. I will start with our digital experiences, where nearly a third of our domestic revenue is transacted and roughly 60% of our overall purchasers visit at some point during their shopping journey. We are on track to launch our innovative improved search experience across.com, Small View and our app later this year.

We have already begun rolling the capability out to a small percentage of customers with plans for full rollout by holiday. We are excited about this experience as we believe it will, over time, be a tool used by customers and employees to solve real problems. This new experience will have AI powered prompts to guide customers to more specific searches and natural conversational filtering for easier product discovery. It will also have fewer, higher quality matches that reflect customer intent and richer product information to support confident buying decisions. During q one, we introduced Best Buy storefronts, which allow influencers and creators to build their own branded digital storefronts on bestbuy.com.

It is early, but we have been pleased with the interest thus far, with more than 400 creators signed up and more than 60 storefronts already launched. Over time, we believe these will help drive increased traffic, engagement, and sales. In our stores, we plan to touch every store this year with shopping experience updates. Starting in Q2, we are adding vendor paths in home theater, expanding tablet and virtual reality departments and enhancing experiences for the upcoming Switch two launch. As expected, there is strong customer demand for this launch and preorder quantities sold out very quickly.

Best Buy is uniquely positioned for the Switch two launch, being one of the only retailers opening their doors at midnight on June 5 for eager customers to pick up their consoles or grab another game. I would note that 70% of preorder customers elected in store pickup, underlining this important strength. The midnight opening is not only for preorder customers to pick up their products, there will also be additional consoles, games and accessories available for purchase. We continue to focus on our unique in store customer experience. And in partnership with our vendors, we have made investments in our certification and training strategy for merchandising, customer engagement, and selling.

For example, in March, we brought our major appliances associates together in person for rigorous training to further upscale in the appliances category, which we expect to drive even higher productivity and better experiences for our customers. Earlier this month, we replicated this approach for computing, and we'll do the same in July with the home theater category, ensuring that our teams are well prepared and knowledgeable across all major categories. Of course, we have a long history of augmenting our labor expertise with vendor provided labor. For example, starting last year, both Verizon and AT and T have increased their investments in store labor and have partnered with us to improve technology systems integration in hundreds of stores. As a result, we are driving increased phone sales and activations and delivered our first mobile phones comp sales growth in three years.

We also feel even better positioned for future product launches. Our second strategic priority for fiscal twenty six is focused on incremental profitability strength. We believe our marketplace launch is even more important in this environment as it provides ultimate flexibility in product assortments, price points, vendors, and SKUs so we can offer customers the broadest and most relevant experience possible, particularly when combined with our upgraded search capability. Also, sellers and advertisers will have an additional avenue to increase their reach and build their brands leveraging our qualified traffic. We have seen strong interest from sellers and have already exceeded the seller count goal we set for the entire year.

We expect to have at least 500 of them onboarded and ready for the initial midyear launch. At launch, customers will be able to return their products directly to sellers or in our stores, and our customers will have the confidence of knowing all sellers will have a universal return window aligning with Best Buy policies. We continue to expect Marketplace to have a positive impact on our operating income rate for fiscal twenty twenty six even after startup costs, investments and estimated cannibalization of our first party product revenue. Over time, we expect Marketplace to help drive profit dollars and unit share. In addition, it will provide opportunities for our Best Buy Ads business through new advertisers and increased traffic.

We continue to see fiscal twenty twenty six as a pivotal year for our Best Buy Ads business. We have had a robust retail media network business for a long time in partnership with our vendors. We are proud of the business that we have built and we see opportunities for growth. In Q1, we made material progress on our plan. We expanded the available inventory on our site by adding new ad slot placements on high volume pages to better meet the level of demand and added 20 new vendor advertisers.

We went live with one of the largest demand site platforms, The Trade Desk. This expands our share of the broader digital dollars to flow to Best Buy ads. We were encouraged by the number of non endemic advertisers who are already advertising with us as a result. We launched the capability called Social Plus in collaboration with Meta. Social Plus will allow advertisers to reach our customers more effectively on Facebook and Instagram.

We are also expanding our engagement with new types of advertisers like quick serve restaurants. We are excited about the results we were able to drive for a major quick serve restaurant who ran an April campaign leveraging our first party gaming segments. Lastly, we filled key leadership roles and opened our New York office. We continue to expect growth in ad collections to benefit our gross profit rate in fiscal twenty twenty six. From an operating income rate perspective, we expect more of a neutral impact due to the investments we are making.

We believe the actions we are taking in fiscal twenty twenty six position us for future growth and rate expansion over the next number of years. This brings us to our third strategic priority for fiscal twenty twenty six. It is imperative that we continue to focus on executing well what is within our control, which includes identifying cost reductions and driving efficiencies to help offset pressures in our business and fund investment capacity for new and existing initiatives. There are many ways we realize these efficiencies. They are often achieved with the help of technology and analytics, through ongoing vendor partnerships and vendor selection throughout enterprise and by modifying existing processes or customer offerings.

Other times, they are the result of us moving on from initiatives that aren't generating the financial return we had initially and originally envisioned. There are a few areas I would like to highlight. Within our procurement operations, we expect to complete the multiyear deployment of our full Source To Pay technology capability in the second quarter. As we shared last quarter, this will give us expanded transparency into billions of dollars of goods not for resale spend. In combination with the enhanced automation of our purchasing process, this paves the way for continuous cost optimization opportunities.

Within our supply chain operations, we recently replaced our prior rule based shipping process with a data driven sourcing solution that uses real time cost data to choose the most efficient fulfillment location. This helps us deliver orders on time and reduce shipping costs. Within our customer care operations, our use of new conversational AI technology, our upgraded IVR systems, and other operational efficiencies have led to both better customer experience and cost savings. In Q1, we saw record low levels of cost per customer contact and customer call transfer rates, as well as record high levels of customer satisfaction. These results are driving reductions in annual call volume expense.

In summary, we continue to demonstrate our strong execution through adaptability, strategic investments and operational strength during turbulent times. We expect to navigate the tariff environment and emerge not only as a vital company, but a vibrant one as the landscape stabilizes over time. We are the trusted source for the latest and greatest new tech as well as a broad range of assortment, unique in store and digital experiences, and the expert Geek Squad services to help our customers. We are also a true partner to our vendors, often working with them from early in the product development cycle all the way to launching products on our sales floor. There are many reasons we are excited for the rest of the year.

From a product category perspective, we expect growth in computing, including tablets, to continue to be driven by the customers' need to replace and upgrade products. We believe this will be helped by both the end of Windows 10 product support in October and ongoing innovation in the form of gradual improvement in AI use cases and the release of new AI features. In mobile phones, we expect benefits from our in store experience improvements with the carriers to deliver growth for the year. In gaming, we expect the new launch and updated store experience to drive sales momentum for the year. We are also excited to expand our in store experience and presence for Ray Ban Meta Glasses.

This technology and other wearable AI products yet to be launched will transform the way people live, and Best Buy is the ultimate customer education destination. In addition, the launch of our marketplace and relentless focus on our online and in store customer experience will continue to underscore our unique position in the industry. Also, our refreshed brand is resonating more deeply with our customers, and we are driving continuous customer experience improvements across the business. Added to that, our digital growth benefited from increased app adoption, checkout conversion and recognizable customers, allowing us to better personalize their experiences in the future. And finally, we continue to invest in our teams who are ready to truly help our customers enrich their lives through technology through more specialized knowledge, unique in home expertise, and robust support.

Our recent engagement scores are the highest we have ever seen, and our turnover remains the lowest we have seen in more than five years. I am so deeply appreciative that they choose to work for Best Buy, how they live our values, and for the culture they have created by bringing their unique experiences themselves to work every day. With that, I will now turn the call over to Matt.

Good morning. Let me start with an overview of how the first quarter performed versus the expectations we shared with you last quarter. Enterprise comparable sales declined 0.7%, which was consistent with our outlook. Our adjusted operating income rate of 3.8% was approximately 40 basis points better than expected, which was primarily driven by favorable SG and A expense. The favorable SG and A was primarily the result of an indirect tax settlement and strong expense management.

Our gross profit rate of 23.4% improved approximately 10 basis points versus last year, which was consistent with our outlook. I will now talk about the first quarter results versus last year. Enterprise revenue of $8,800,000,000 decreased 0.9% versus last year. Our adjusted operating income rate was flat to last year with both gross profit and SG and A largely similar to last year as a percentage of revenue. While adjusted operating income dollars were flat to last year, our adjusted diluted earnings per share decreased 4% to $1.15 1 of the drivers of this lower EPS was approximately $10,000,000 of lower investment income, which was due to a lower average cash balance combined with lower short term interest rates.

By month, our enterprise comparable sales were down approximately 2.5% in February before increasing 0.5% in March and declining 0.4% in April. The shift of Easter improved March and negatively impacted April comparable sales by an estimated two fifty to 300 basis points. In our domestic segment, revenue decreased 0.9% to $8,100,000,000 driven by a comparable sales decline of 0.7%. International revenue of $640,000,000 decreased 0.6% versus last year, which was driven by a comparable sales decline of 0.7%. The revenue decrease also included a negative foreign currency impact of approximately four fifty basis points, which was offset by revenue from Best Buy Express locations that opened in Canada after Q1 fiscal twenty twenty five.

Our domestic gross profit rate increased 10 basis points to 23.5%. The higher gross profit rate was primarily driven by improvement within the services category, which includes our membership offerings. This improvement was partially offset by rate pressure within our Best Buy Health business and lower credit card profit sharing revenue. Our international gross profit rate decreased 80 basis points to 22%. The lower gross profit rate was primarily due to lower product margin rates and unfavorable supply chain costs.

Moving to SG and A, where our domestic adjusted SG and A decreased $13,000,000 which was primarily due to a favorable indirect tax settlement. In addition, we incurred $109,000,000 in restructuring charges this quarter. Those charges are primarily associated with the restructuring initiative within our Best Buy Health business. During the quarter, we returned a total of $3.00 $2,000,000 to shareholders through dividends of $2.00 $2,000,000 and share repurchases of $100,000,000 We have raised our quarterly dividend for twelve straight years and remain committed to being a premium dividend payer. Moving on to our full year fiscal twenty twenty six financial guidance.

In March, we made it clear that the guidance we provided excluded any estimated impacts from recently announced tariffs. At the same time, we provided a ballpark estimate of approximately one point of comparable sales pressure to our guidance if the China tariffs that went into effect on February 4 remained at the 10% level for the full year. As Corey stated, a lot has changed since March. Tariff rates have changed, the sourcing exposure for many of our products has been changing, and the conversation with our vendors has also progressed. As such, the updated guidance we are providing today includes our best estimate of the range of financial impacts from tariffs.

Within that guidance, our working assumption is that tariffs stay at the current levels for the rest of the year. Clearly, the trade policy discussions are ongoing and tariff rates could change, but anchoring our guidance to the current tariff rates felt most appropriate. In addition, our guidance includes our best estimate for each of our revenue categories, which incorporates the trends we have seen year to date. Our guidance also assumes that there is no material change in consumer behavior from the trends we have seen in recent quarters. Our updated enterprise guidance for fiscal twenty twenty six is the following: revenue in the range of $41,100,000,000 to $41,900,000,000 comparable sales of down 1% to up 1% adjusted operating income rate of approximately 4.2%, and adjusted effective income tax rate of approximately 25%, which is unchanged from our prior guidance, adjusted diluted earnings per share of $6.15 to $6.3 Capital expenditures of approximately $700,000,000 which represents the low end of our prior guidance range.

Lastly, we still expect to spend approximately $300,000,000 on share repurchases. Next, I will cover some of the key working assumptions that support our guidance. We expect our gross profit rate to be slightly unfavorable to last year with most of the primary components of our gross profit planned very similar to fiscal twenty twenty five from a rate perspective. There are a few items I would like to highlight. First, our product margin rates are now expected to be unfavorable compared to last year, which is largely driven by a higher portion of our sales mix coming from lower margin categories such as computing.

In addition, our outlook reflects our plans to remain competitively priced. Next, growth from the Best Buy ads and the rollout of our U. S. Marketplace is expected to benefit our gross profit rate. We now expect our services category including membership to benefit our gross profit rate compared to the prior year.

Lastly, we still expect the profit share on our credit card arrangement to have a neutral impact in fiscal twenty twenty six. Now moving to our adjusted SG and A expectations. As a percentage of revenue, we now expect our adjusted SG and A to be slightly lower than fiscal twenty twenty five, which includes the following puts and takes. We continue to expect benefits from ongoing efficiencies and effectiveness work streams including Best Buy Health. Indirect tax settlement we received in the first quarter lowers our full year SG and A compared to last year.

Partially offsetting these items are SG and A increases in support of our Best Buy ads and marketplace initiatives, which includes advertising, technology and employee compensation expense. At the high end of our revenue guidance, the store payroll expense and items like credit card processing fees are expected to increase with minimal impacts from a rate perspective. Lastly, the high end of our guidance now reflects incentive compensation that is approximately flat to last year, while the low end of our guidance reflects our plans to further reduce our variable expenses including incentive compensation to align with sales trends. Before I close, let me share a couple of comments specific to the second quarter. We expect our second quarter comparable sales to be slightly down versus last year and our adjusted operating income rate to be approximately 3.6%.

Our gross profit rate is planned very similar to last year's second quarter with increased SG and A expected to be the primary driver of the lower operating income rate. As a reminder, last year's second quarter SG and A included a favorable legal settlement and lower medical claims. The combination of these two items provided the benefit of approximately $20,000,000 to last year's second quarter. I will now turn the call over to the operator for questions.

Thank you. You. Your first question comes from Scott Ciccarelli with Truist. Your line is open.

Good morning, guys. So I think we all understand that the tariff scenario has been highly dynamic, but it does sound like you have a pretty significant difference in terms of your China sourcing versus, call it, three months ago. Can you just help us better understand that? Like, is that just a function of, you know, is the vendors moving product around for you? Is it just better understanding where the products are coming from?

Any more color on that. And then part two, just a housekeeping item. How big was the tax element in the s g and a? Thanks.

Scott, I'll start on that China sourcing question. I'm actually just reiterate a few things to make sure that everyone got all the data points because I do think they're pretty important. First, we said that China has come down to 30 to 35% compared to the 55% metric. And then just to reiterate, about half the China source products are at the 30% tariffs, and then roughly half are at the 20% tariffs pending the February investigation. Then we said combination of US and Mexico are at about 25% of COGS, and that has zero tariffs across both of those.

That leaves roughly 40%, that are coming from other countries like Vietnam, India, South Korea, Taiwan, which are currently at 10%. As we noted, we only directly import two to 3%. And so, really, it's been about these mitigation efforts that are both coming from the vendors and Best Buy that are and that that's what's making it happen so that the increased product costs that are flowing to us are actually lower than the overall tariff rates. Explicit to those mitigations, Scott, to your point, the first one is one of the most important, and that is more leveraging of manufacturing flexibility than we were seeing prior. Since 2018, many vendors, including ourselves, have created new manufacturing locations, and you can flex some of those new locations up and perhaps perhaps flex down some of the locations that are in China, thereby changing, that mix that you're seeing.

And remember, these are global supply chains, so they're supplying to many different countries across the globe. And so you're gonna use potentially different locations to supply different countries depending on the tariff situation. Two, we also talked about increasing country diversification just writ large. Obviously, we try to influence our vendor partners. They're influenced, themselves given the situation to continue building resiliency into the supply chains and ensuring there are at least two locations available to manufacture the same or similar products for distribution across the globe.

And so we're seeing even just some of those newer distributions, come to market, which is helping to create that diversification. And then from there, we get into, the third mitigation strategy, which is negotiating costs, where, obviously, we're gonna work with our vendor partners to absorb part of the tariff burden, cost optimized products, and or consolidate volume into fewer partners for leverage in negotiations. And then fourth, adjusting assortment. So that too can change the mix. Right?

Because you might adjust your assortment, review it, modify it to ensure we still have a wide range of customer needs and budgets, but you're gonna maybe rationalize where you need to to consolidate that volume, and that might also change your mix. And then finally, as we talked about as a last resort, adjusting prices. And I I think I just wanna reiterate one more time that the cost increase we see does not always automatically translate into customer price increases. We gave you our best view on what we think is translating right now based on what we can see in the market.

Yeah. Scott, into the tax settlement sizing. Our domestic SG and A was about $13,000,000 lower than last year and it's the only item we called out. So it's fair to assume that it's at least $13,000,000 if not a little higher than that.

Thank you. The next question comes from Mike Baker with D. A. Davidson. Your line is open.

Okay, great. Thanks. Can you talk about do you think you saw any pull forward in demand? Some vendors and other retailers have talked about seeing some pull forward in consumer electronics demand, although it doesn't seem to have shown up in your same store sales. And related to that, any comment on market share?

How you think you're holding up versus the market and versus other retailers? Thank you.

Sure. Yes, I mean, we started the quarter a little slower. February was a little lower than as we started the quarter and improved throughout the year. It's a little hard to, look at the specific impact to a pull forward, if you will, because of the shifting of of the events for Easter. But likely, there was a a few weeks a couple weeks there that were that were elevated because of the pull forward, but not really hard to size.

You can appreciate because of the the Easter shift.

I think there's one thing that's a little hard to judge in terms of q one consumer demand, and that is at the very April, you saw a lot of preorders come through for the switch. Those are dollars that consumers feel like they've spent in consumer electronics, but you're not gonna actually see those dollars flow through until q two. So, yep, we maybe have two weeks of pull forward in a couple categories, but also we have this kind of weird factor that consumers feel like they're spending money in consumer electronics, but yet they're not act we won't recognize that. They won't actually get the products until June just to add on to Matt's comments. In in terms of market share, I mean, we've said this multiple times.

There isn't a great single source for everything we sell, especially in consumer electronics. And, obviously, quarter to quarter within categories, you're going to see fluctuations, depending on competitive actions and trade off decisions. I think it's fair to say that we are gonna make strategic pricing and promotional decisions depending on the environment. And in q one, we talked about this going into the quarter. This is a quieter quarter for us from an events perspective.

There are fewer launches and initiatives, which tend to be the places where we over index in share. And so I, you know, I think in q one, we maybe saw a little bit of share loss, but, we have really good plans for the rest of the year, especially as we think about those launches and we think about the laundry list of things that I gave at the end of my prepared comments in terms of where we are investing and the timing on which we expect to see those returns. And so last year, we gained share in computing. We expect to gain share again this year. Same with gaming where we saw share gains last year and really some record high share levels for us.

So we I think we have the right plans in place for the year, and we're a little less concerned about precisely in any given quarter exactly where that ends up.

Fair enough. If I could ask a follow-up. Last quarter, you did indicate that you thought there might be some changes in consumer behavior because of the tariffs. And even though I think you're mitigating a lot and not seeing a lot of price increases, there are I think you're saying some price increases, yet you're saying that you're not seeing any change in consumer behavior. So is the I guess, can you square those as the consumer not pulling back, or are we not seeing any demand destruction from higher prices?

So let me reiterate what we've been saying about the consumer from literally the last few quarters. That is the consumer is remaining resilient, but we've been very clear to say they are making trade off in their spend and their budget decisions based on higher prices across many areas of their lives. And I think while while tariffs is perhaps an additional one, there's been a great deal of inflation up to this point. So this isn't just a conversation about tariffs. We've been very clear in saying consumers are making trade offs, and we can see that within our categories.

At the same time, we see a consumer who is seeking value and sales events, and they are willing to spend on higher price points when they need to or when they see compelling new technology. That also is remaining true for us. And so what we're trying to do is take even in the last quarter, are we seeing relatively consistent behaviors? Yes. And there are some categories where, if you take something like televisions, where we can definitely see consumers trying to make some of those value trade offs.

But at the same time, we see this continued strength in computing and tablets where there's both need and innovation, and they're willing to go ahead and spend in those areas.

Your next question comes from Greg Melich with Evercore ISI. Your line is open.

Hi, thanks. I have to follow-up on one of the key areas of initiatives, the 3P growth in the advertising. Where does that show up currently? Which segments does that show up in? And then I had a follow-up.

Yeah. The incremental advertising that we were planning to drive through the ad initiative, some of which would show up in revenue and some of which would show up in gross margin. It kinda depends on the nature of the contract and nature of the arrangement that we've made. So the answer is it it depends based on whether in large part of whether it's somebody we already work with in terms of a vendor. If it's not endemic, in many cases, can show up in revenue in addition to margin.

But, right now, most of that ad ad ad sales that comes through comes through in the margin category. Over time, we would expect to add more to the revenue side as we build out that initiative.

And for three p, is that the same? How do we think about that?

Yeah. Three p would be traditionally like other marketplaces where you would recognize the commission, revenue and gross margin. And then we at some point may give like gross sales commentary like other folks do, the gross commissions that will show up in margin from the 3P sellers.

And I just my follow-up is on tariffs. Thanks for all the detail. That's super helpful. I guess it feels like the blended rate, if my algebra works quickly, is in the mid to low teens from where we are today. Can we think about that price elasticity that you talked about earlier in March, do you think that still holds given that sort of this if we land at this tariff rate in the low to mid teens?

So Greg, I want to reinforce something that I said in my prepared remarks. After I went through all the mitigation efforts that we're talking about, I actually made it a point to say that due to those mitigation efforts, both by vendors and by Best Buy, the increased product costs that are flowing to us are lower than the tariff rates. So while I know you're doing the blended math, and I know that's a great place to start, then you have to assume because of that laundry list of mitigation things I'm talking about, there are other ways for us to try to mitigate some of those tariffs and collectively make sure that we are staying competitive for our customers. And so the elasticity has been that, the team built, and they've done an amazing job, building some models around this, are built on kind of these lower tariff levels that we would expect to flow through based on these ongoing mitigation efforts in partnership, with our very, wonderful vendor partners.

Maybe just that yeah. Maybe just that on, Greg, the the we have we know a lot more since the last time we did this estimate. So we've we've we've taken another attempt at understanding the elasticities, which are quite frankly different, by category. And so we have updated our assumptions based on those elasticities, but everything Corey said was exactly right. Those elasticities are based off of cost increases that aren't necessarily at the level of effective tariff rate that we flowing through.

That's great. Good luck and thanks for all the help.

Your next question comes from Simeon Gutman with Morgan Stanley. Your line is open.

Hi, this is Lauren Ng on for Simeon. Our first question is, you sounded pretty positive on your categories such as computing and tablets, mobile phones due to the replacement cycle or other maybe in store initiatives. Can you bridge that positive sentiment versus your updated comp guidance down one to positive 1%?

Yeah. I mean, we did a few things for our for our updated guidance range. We first looked at the base level trends that we're seeing happening throughout the Q1 and in some cases things like computing performed better, mobile performed better than we expected. In some other cases, as it always does, some other categories performed a little lower than our expectations. So we looked at those assumptions for the remaining part of the year as best we could, made some adjustments.

And then what we did was we applied, an updated view of what we believe the tariff impacts could be based on all the all the commentary that we've already given. So there's clearly a range that we're providing for both the high and low in terms of the possible tariff impacts, but those two were also layered on to and not the same, but similar concept to what we provided last three months ago when we said about a one point of comp was for the 10% China tariffs. It's it's the same idea except that we've updated our information and now layer that into the guide overall.

Okay. Great. That's helpful. And then our follow-up is just on gross margins. Is there anything to call out from a cadence perspective?

Specifically, when do you expect maybe benefits from the rollout of The US marketplace to start taking shape? And if you could maybe help size the opportunity of margin benefits from the marketplace? Thank you.

Yeah. We haven't sized the the benefits from either the Best Buy ads initiative or marketplace. We have we have said and continue to believe that the the benefits, the rate should be helped in the back half of the year from both of those items. Marketplace is, actually an OI help OI rate help for the full year. The ads business while helping gross margin rate a bit, it does have a bit of investment, which kind of makes the the OI impact for the year fairly neutral, but they both do help boost the the gross profit rate more towards the back half of the year.

And we haven't sized them, but they are they are helping to, you know, to to drive a a offset some of the pressures that that always exist as we as we move through the year.

Your next question comes from Peter Keith with Piper Sandler. Your line is open.

Thanks. Good morning. Appreciate all the detail. Maybe to follow-up on the marketplace. Are you still on track for a mid year launch?

And then on the cannibalization angle, is there any negative impact, on comp this year that that would be factored into the outlook?

Yeah. We still are on pace for a midyear launch. And I think we were pretty explicit when we talked about it that even after the investments that we're making and the cannibalization, we still saw this as accretive overall both at a gross profit level and at an operating income level. So I think the team is and we have some knowledge from Canada, so we have some pretty good background knowledge on how to estimate that, and, the team has tried to take that into account.

Best Buy (BBY) Q1 2026 Earnings Call Transcript

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