Best Buy Raises FY27 Outlook as Comparable Sales Rise 4.1%

Best Buy raised its fiscal 2027 outlook after second-quarter comparable sales increased 4.1%, extending the electronics retailer’s stronger start to the year. Revenue for the 13 weeks ended August 1 rose to $9.78 billion from $9.44 billion a year earlier, while adjusted diluted earnings per share increased 15% to $1.47.

The company now expects full-year comparable sales growth of 1.9% to 3.0%, up sharply from its previous range of a 1.0% decline to a 1.0% increase. Best Buy also lifted its adjusted EPS forecast to $6.70 to $6.90 from $6.30 to $6.60 and raised expected revenue to $42.3 billion to $42.8 billion from $41.2 billion to $42.1 billion.

The quarter showed stronger demand across much of Best Buy’s U.S. business. Domestic comparable sales rose 4.5%, compared with 1.1% growth a year earlier, and domestic online comparable sales increased 5.1%. International comparable sales, by contrast, declined 1.8%.

Computing and home theater help broaden sales growth

Best Buy said in its August 27 earnings release that comparable sales grew across most of its categories. The largest contributors on a weighted basis were computing, home theater and a group of emerging categories that included AI glasses and trading cards. Traditional gaming was a partial offset.

Domestic revenue increased 4.3% to $9.07 billion, supported by the 4.5% comparable-sales gain. Online revenue reached $3.00 billion and accounted for 33.1% of domestic sales, up from 32.8% a year earlier. The online comparable-sales increase matched the 5.1% growth rate reported in the prior-year quarter, but this time it accompanied a much stronger overall domestic sales performance.

The category detail points to demand that was not limited to a single product cycle. Comparable sales in computing and mobile phones increased 6.8%, consumer electronics rose 5.6%, and services gained 6.4%. Appliances were roughly flat with a 0.2% increase. Entertainment fell 6.3%, reflecting the drag from traditional gaming that management highlighted in its discussion of the quarter.

That mix is important for Best Buy because its fiscal 2026 results were still marked by uneven consumer spending and pressure in several large-ticket categories. The first quarter of fiscal 2027 had already shown a 2.0% enterprise comparable-sales increase. The second-quarter acceleration to 4.1% gave management more evidence that the improvement was broad enough to support a higher full-year sales range rather than simply a better opening quarter.

Performance outside the United States was weaker. International revenue fell 4.2% to $709 million, with comparable sales down 1.8% and foreign-exchange movements also reducing reported revenue. The international gross profit rate improved to 22.3% from 21.8%, but adjusted selling, general and administrative expense increased to 20.5% of revenue from 19.3%.

Margin improvement came with a tariff-refund benefit

Best Buy’s profitability also improved, although one component of the margin gain was not a normal retail operating benefit. Domestic gross profit margin increased to 24.0% from 23.4%. The company attributed the increase primarily to growth in its Marketplace and Best Buy Ads businesses and approximately $34 million of refunds related to IEEPA tariffs. Lower product margin rates partly offset those benefits.

The tariff refunds make it important to separate the quarter’s underlying operating progress from items that may not repeat at the same level. Best Buy did not attribute the entire margin improvement to the refunds, since Marketplace and advertising also contributed, but the $34 million amount was material enough to affect the domestic gross-margin comparison. Product margins themselves were lower, which remains a relevant counterweight to the stronger sales headline.

Adjusted domestic SG&A expense increased to $1.78 billion from $1.68 billion, or 19.6% of revenue compared with 19.3% a year earlier. Best Buy cited higher compensation, increased spending tied to Marketplace and Best Buy Ads, and higher advertising expense. Lower Best Buy Health expense provided a partial offset.

At the enterprise level, adjusted operating income margin rose to 4.3% from 3.9%. GAAP operating margin also reached 4.3%, up from 2.7%, but that year-over-year increase was amplified by restructuring charges in the prior-year period. Best Buy recorded a $6 million reduction to restructuring charges in the latest quarter, compared with $114 million of restructuring charges a year earlier.

That difference is also visible in earnings per share. GAAP diluted EPS rose 70% to $1.48 from $0.87, while adjusted diluted EPS increased a more moderate 15% to $1.47 from $1.28. Net earnings increased to $315 million from $186 million. The adjusted comparison better isolates the improvement in the operating business from the large restructuring charge that weighed on the prior-year GAAP result.

Higher guidance sets a stronger bar for the second half

The revised full-year forecast raises the expectations Best Buy will need to meet through the holiday season. In addition to the higher revenue, comparable-sales and adjusted-EPS ranges, the company increased its expected adjusted operating income rate to 4.4% to 4.5% from 4.3% to 4.4%. Its approximately 25.5% adjusted effective tax rate and roughly $750 million capital-spending plan were unchanged.

For the third quarter alone, Best Buy expects comparable sales growth of 1.0% to 3.0% and an adjusted operating income rate of 4.1% to 4.2%. That forecast implies management does not expect the 4.1% second-quarter comparable-sales pace to be repeated automatically in every period. The company’s annual outlook still leaves room for slower growth as comparisons shift and consumer spending moves through the holiday cycle.

Incoming Chief Executive Officer Jason Bonfig said the higher annual guidance reflected the strength of the first half and the company’s momentum entering the second half. Best Buy has been building Marketplace and advertising into larger profit contributors while continuing to rely on its core electronics categories, a combination that was visible in both the sales and margin results this quarter.

Capital returns continued alongside that investment. Best Buy returned $239 million to shareholders during the quarter, including $203 million of dividends and $36 million of share repurchases. The company still expects to spend about $300 million on repurchases in fiscal 2027, and its board authorized another quarterly dividend of $0.96 per share, payable October 8 to shareholders of record on September 17.

The raised outlook will also carry into a leadership transition. Corie Barry remains chief executive for the next several months, while Bonfig is scheduled to take over on November 1. Best Buy’s third-quarter results will provide the next test of whether the stronger comparable-sales trend is holding as the company moves toward its most important seasonal selling period and works to deliver the higher fiscal 2027 targets.