BEST BUY CO INC Q1 FY2026 earnings call

• Strategic priorities include driving omnichannel experience improvements, launching and scaling incremental profit streams (e.g., Best Buy Marketplace and Best Buy Ads), and driving operational effectiveness and efficiency.
• Omnichannel: On track to launch innovative search experience across dot-com, small view, and app; rolling out store shopping experience updates; partnering with vendors for training in major categories.
• Incremental profit streams: Marketplace has strong seller interest, expected to positively impact operating income rate; Best Buy Ads expanded inventory, added vendors, and launched [Social+] in collaboration with Meta.
• Operational efficiency: Completed multi-year deployment of source-to-pay technology in procurement; replaced rule-based shipping process with data-driven sourcing in supply chain; improved customer care with conversational AI and IVR systems.

In the Domestic segment, revenue decreased 0.9% to $8.1 billion, driven by a comparable sales decline of 0.7%. International revenue of $640 million decreased 0.6% versus last year, driven by a comparable sales decline of 0.7% and a negative foreign currency impact of approximately 450 basis points. The domestic gross profit rate increased 10 basis points to 23.5%, primarily driven by improvement within the services category. The international gross profit rate decreased 80 basis points to 22% due to lower product margin rates and unfavorable supply chain costs.

• Fiscal 2026 revenue range: $41.1 billion to $41.9 billion.
• Comparable sales range: Down 1% to up 1%.
• Adjusted operating income rate: Approximately 4.2%.
• Adjusted diluted earnings per share: $6.15 to $6.30.
• Capital expenditures: Approximately $700 million.
• Share repurchases: Approximately $300 million.
• Second quarter guidance: Comparable sales slightly down versus last year, adjusted operating income rate approximately 3.6%.

• Uncertainty in tariff environment including changing rates, supply chain dynamics, and consumer reaction.
• Potential material change in consumer behavior affecting sales.

Q: Scot Ciccarelli with Truist asked about China sourcing and the tax settlement size.

A: Corie Barry reiterated China sourcing changes due to vendor manufacturing flexibility, negotiation, country diversification, assortment adjustment, and price adjustment; Matt Bilunas said domestic SG&A was about $13 million lower due to the tax settlement.

Q: Mike Baker with DA Davidson asked about demand pull-forward and market share.

A: Matt Bilunas mentioned possible pull-forward due to Easter shift; Corie Barry talked about market share considering strategic pricing and promotional decisions and upcoming launches.

Q: Greg Melich with Evercore ISI asked about 3P growth, advertising, and tariffs.

A: Matt Bilunas explained 3P and advertising impact on margin and revenue; Corie Barry discussed tariff elasticities based on mitigation efforts.

Q: Simeon Gutman with Morgan Stanley asked about bridging positive category sentiment with comp guidance and Marketplace launch timing.

A: Matt Bilunas explained updated guidance considering category trends and tariff impacts; Corie Barry said Marketplace is on track for mid-year launch and accretive overall.

Q: Peter Keith with Piper Sandler asked about Marketplace launch and Switch 2 impact.

A: Corie Barry confirmed mid-year launch and Switch 2 excitement; Jason Bonfig talked about other innovation in computing, TVs, and AR.

Q: Steven Zaccone with Citi asked about comp drivers and pricing impact.

A: Matt Bilunas discussed comp drivers in various categories; Corie Barry said balance between sales and pricing to stimulate demand.

Q: Brian Nagel with Oppenheimer asked about focus on sales vs margin and efficiencies in Best Buy Health.

A: Corie Barry talked about balancing sales and margin; Matt Bilunas discussed efficiencies in various operations; Corie Barry discussed Best Buy Health's viability and future focus.

Q: Jonathan Matuszewski with Jefferies asked about pricing blended hike and Best Buy Health role.

A: Matt Bilunas and Corie Barry discussed fluid pricing situation; Corie Barry talked about Best Buy Health's remaining viable parts and future focus on home healthcare.