Best Buy Lifts FY26 EPS Outlook After Q3 Comparable Sales Grow 2.7%, Driven by Computing, Gaming, and Mobile
Solid Q3 Performance: Sales Growth Led by Key Tech Categories
Best Buy’s third-quarter results signal a return to top-line growth, with enterprise comparable sales up 2.7% and notable gains in computing, gaming, and mobile phones. CEO Corie Barry cited broad-based performance improvements—both in-store and online—and underscored continued enhancements in customer experience as the retailer looks ahead to the critical holiday period.
| Metric | Q3 FY26 | Q3 FY25 | YoY Change |
|---|---|---|---|
| Enterprise Revenue ($M) | 9,672 | 9,445 | +2.4% |
| Enterprise Comparable Sales | +2.7% | -2.9% | +5.6 pts |
| Domestic Revenue ($M) | 8,878 | 8,697 | +2.1% |
| Domestic Comp Sales | +2.4% | -2.8% | +5.2 pts |
| International Revenue ($M) | 794 | 748 | +6.1% |
| International Comp Sales | +6.3% | -3.7% | +10 pts |
| Domestic Online Comp Sales | +3.5% | -1.0% | +4.5 pts |
| Adjusted Diluted EPS | 1.40 | 1.26 | +11.1% |
Operating Margins Remain Healthy Amid Higher Incentives and Asset Impairments
Profitability continues to support the retailer’s operating model. The Q3 adjusted operating income rate improved to 4.0% from 3.7% last year. However, the reported operating income margin dipped to 2.0% from 3.7% due to a one-time, non-cash $192 million impairment charge in Best Buy Health—reflecting shifting projections tied to pressures in the Medicaid and Medicare Advantage markets. On an adjusted basis, the domestic segment’s SG&A expense ratio fell from 19.7% to 19.2%, as cost controls and a moderation in certain expense lines outpaced increased incentive compensation.
Guidance Raised: FY26 EPS Now Expected at $6.25–$6.35
Citing stronger-than-expected Q3 results, CFO Matt Bilunas announced a boost in Best Buy’s full-year outlook. The retailer now anticipates FY26 adjusted diluted EPS of $6.25–$6.35, slightly higher than prior guidance of $6.15–$6.30. Full-year revenue is projected at $41.65–$41.95 billion, with comparable sales now targeted to grow between 0.5% and 1.2% (compared to previous guidance of -1.0% to 1.0%). Adjusted operating income rate expectations remain at 4.2%, highlighting consistent profitability despite an evolving macro backdrop.
| FY26 Guidance Metric | New Guidance | Prior Guidance |
|---|---|---|
| Revenue ($B) | 41.65–41.95 | 41.1–41.9 |
| Comparable Sales | 0.5%–1.2% | -1.0%–1.0% |
| Adj. Op. Income Rate | ~4.2% | ~4.2% |
| Adj. Effective Tax Rate | ~25.4% | ~25.0% |
| Adj. Diluted EPS | 6.25–6.35 | 6.15–6.30 |
| CapEx ($M) | ~700 | ~700 |
| Planned Share Repurchases ($M) | ~300 | ~300 |
Growth Engines: Online Expansion, Core Tech, and Strong Holiday Setup
Growth in computing and mobile—driven by customer upgrades and ongoing product cycles—accounted for 49% of domestic revenue. Gaming and entertainment rebounded sharply, helping offset softer trends in appliances and home theater. Notably, online comparable sales rose 3.5% in the domestic segment, lifting e-commerce’s share to 31.8% of revenue.
| Domestic Category Mix | % of Q3 Revenue | Comp Sales YoY |
|---|---|---|
| Computing & Mobile | 49% | +7.6% |
| Consumer Electronics | 26% | -2.9% |
| Appliances | 11% | -8.4% |
| Entertainment | 6% | +14.0% |
| Services | 7% | -1.0% |
| Other | 1% | -6.5% |
International sales momentum also strengthened, up 6.1% with comparable sales rising 6.3% on improved supply chains and product demand, despite foreign exchange headwinds.
Capital Allocation Remains Steady: Shareholder Returns On Track
In Q3, Best Buy returned $234 million to shareholders—$199 million through dividends and $35 million in share repurchases. Year-to-date returns reached $802 million. The board also authorized a regular quarterly dividend of $0.95 per share, underscoring commitment to capital returns while maintaining strategic investments in operations and growth initiatives.
Key Takeaway: Best Buy's Guidance Signals Confidence, While Asset Impairments Highlight Health Segment Challenges
With strong Q3 momentum and an upgraded full-year outlook, Best Buy appears well-positioned for the holiday season and FY26. Investors may want to monitor continued performance in core technology categories and the company’s ability to drive margin expansion. Meanwhile, recent impairments in the health segment serve as a reminder that select initiatives remain under pressure and warrant continued scrutiny. For now, the retailer’s healthy cash generation, improving sales, and strategic guidance provide grounds for optimism as consumer electronics cycles reset.
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