01—Abstract
Summary
Summary of the 10-Q filed June 6, 2025. Cited figures are marked; the original filing is the authoritative source.
Best Buy Co., Inc. reported first-quarter fiscal 2026 results (quarter ended May 3, 2025) with revenue of $8.77 billiona, down from $8.85 billion a year earlier, and comparable sales declining 0.7%.
Operating income fell to $219 millionb from $312 million, driven by $109 million of restructuring charges tied to an initiative focused on optimizing the Best Buy Health business and reducing tariff exposure in China. Net earnings were $202 million, or $0.95 per diluted share, versus $246 million, or $1.13 per diluted share, in the prior-year quarter. Adjusted diluted EPS, a non-GAAP measure reconciled in the filing, was $1.15 compared with $1.20 a year earlier.
Cash flow weakened, with operating cash flow of $34 millionc versus $156 million a year earlier, primarily reflecting the timing and volume of inventory purchases and payments. Cash and cash equivalents fell to $1.15 billion from $1.58 billion at fiscal year-end, and the company repurchased $100 million of common stock while paying $202 million in dividends. The company also entered into a new $1.25 billion five-year revolving credit facility on April 18, 2025, with no borrowings outstanding.
Remaining authorization under the $5.0 billiond share repurchase program was $3.18 billion as of May 3, 2025. Management noted continued uncertainty around tariffs, stating that vendor imports from China are estimated at 30% to 35% of products purchased, compared with 55% disclosed in the prior annual report.
Domestic comparable sales declined 0.7%, with growth in computing and mobile phones offset by declines in home theater, appliances and drones. The company expects to reduce its Domestic Best Buy store count by approximately 5 to 10 stores in fiscal 2026.
02—Key points
Key Highlights
- Revenue of $8.77 billion declined from $8.85 billion; comparable sales fell 0.7% after a 6.1% decline in the prior-year period.
- Operating income dropped to $219 million from $312 million, primarily due to $109 million in restructuring charges, mainly related to the Best Buy Health optimization and China sourcing initiative.
- Diluted EPS was $0.95 versus $1.13 a year earlier; adjusted diluted EPS was $1.15 versus $1.20.
- Operating cash flow was $34 million versus $156 million, reflecting inventory and payables timing; cash and cash equivalents decreased to $1.15 billion.
- The company returned capital through $100 million of share repurchases and $202 million of dividends, with $3.18 billion remaining under its $5.0 billion repurchase authorization.
- A new $1.25 billion five-year revolving credit facility was entered into on April 18, 2025, replacing the prior facility and remaining undrawn.
- China-sourced vendor imports were estimated at 30% to 35% of purchases, down from 55% in the fiscal 2025 Form 10-K, as the company works to mitigate tariff impacts.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Best Buy kept $0.02.
- Revenue$8.77B100.0%
- Cost of revenue−$6.72B76.6%
- Gross profit$2.05B23.4%
- Operating costs−$1.83B20.9%
- Operating income$219.0M2.5%
- Interest, other & tax−$17.0M0.2%
- Net income$202.0M2.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed June 6, 2025Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $8.77B$8.85B | −0.9% |
| Cost of Revenue | $6.72B$6.78B | −1.0% |
| Gross Profit | $2.05B$2.06B | −0.7% |
| SG&A Expenses | $1.72B$1.74B | −0.9% |
| Operating Income | $219.00M$312.00M | −29.8% |
| Interest Expense | $12.00M$12.00M | 0.0% |
| Net Income | $202.00M$246.00M | −17.9% |
| EPS (Basic) | $0.95$1.14 | −16.7% |
| EPS (Diluted) | $0.95$1.13 | −15.9% |
| Shares Outstanding (Basic) | 212.00M216.20M | −1.9% |
| Shares Outstanding (Diluted) | 213.00M217.20M | −1.9% |
05—Questions
Frequently Asked Questions
Why did operating income decline so sharply in the first quarter of fiscal 2026?
Operating income fell to $219 million from $312 million mainly because restructuring charges rose to $109 million from $15 million. The charges relate to a new initiative focused on optimizing the Best Buy Health business, including exiting a component of that business, and reducing tariff exposure in China. Gross profit was roughly flat at $2.05 billion, and SG&A declined slightly to $1.72 billion.
How is the company's underlying profitability trending excluding restructuring charges?
On a non-GAAP basis, adjusted operating income was $333 million in both periods, and the adjusted operating income rate was 3.8% in both quarters. Adjusted diluted EPS declined to $1.15 from $1.20, primarily due to lower investment income. The filing states the Domestic segment adjusted operating income rate was unchanged at 4.0%.
What is the company's liquidity position and how is it managing cash?
Cash and cash equivalents were $1.15 billion as of May 3, 2025, down from $1.58 billion at February 1, 2025. The company had no borrowings under its $1.25 billion revolving credit facility and $1.25 billion of undrawn capacity. Management said the decline in operating cash flow was driven by inventory and payables timing, and capital expenditures were $166 million in the quarter.
How are tariffs affecting Best Buy's sourcing and business?
The company directly imports approximately 2% to 3% of its assortment but relies heavily on vendor imports from China, which it estimates at 30% to 35% of products purchased, compared with 55% in its prior annual report. Approximately 25% of products are sourced from the U.S. and Mexico. Management says it continues to work with vendors to mitigate the impact of tariffs, and the foreign currency and tariff environment remain significant uncertainties.
06—Continue