Best Buy’s Strong Quarter Runs Into Second-Half Growth Concerns

Best Buy delivers growth, but investors look beyond the quarter

Best Buy (BBY) reported second-quarter revenue of $9.8 billion, up about 4% from a year earlier, while adjusted earnings per share rose 15% to $1.47. Comparable sales increased 4.1%, well ahead of the 1.6% Wall Street estimate cited in the results, as computing, home theater and emerging technology categories contributed to growth.

The retailer also raised its full-year revenue, earnings and comparable-sales forecasts. Yet BBY stock fell nearly 5% Thursday. After entering earnings with a gain of nearly 31% in 2026, the market reaction shifted attention from the strong quarter toward whether Best Buy can sustain its momentum as computing comparisons become more difficult and consumers remain focused on value.

Key Points

• Best Buy reported $9.8 billion in Q2 revenue, adjusted EPS of $1.47 and comparable-sales growth of 4.1%, with growth across nearly all major product categories.
• Full-year guidance increased to $42.3 billion–$42.8 billion in revenue, 1.9%–3% comparable-sales growth and adjusted EPS of $6.70–$6.90.
• BBY stock fell nearly 5% as investors focused on tougher second-half computing comparisons, higher memory costs and questions about whether recent sales momentum can continue.

Best Buy’s sales recovery broadens beyond computing

Best Buy's second-quarter performance showed improvement across several parts of the business. Domestic revenue increased to roughly $9.1 billion, while domestic comparable sales rose 4.5%. Domestic gross margin expanded 60 basis points to 24%.

Computing remained the largest contributor to comparable-sales growth and recorded its tenth consecutive quarter of positive comps. Home theater ranked second, with domestic television sales increasing more than 10% year over year alongside market-share gains.

The company is also seeing growth from newer products. Emerging categories including AI glasses, trading cards and health rings more than doubled from a year earlier and contributed approximately one percentage point to quarterly comparable-sales growth. Mobile phones recorded a sixth consecutive quarter of growth, while major appliances returned to slight growth.

Best Buy's Marketplace and advertising operations provided another source of support. Best Buy Ads is on track for 10% growth this year after generating $900 million in collections last year, while the U.S. Marketplace reached approximately $300 million in gross merchandise value during Q2. The company now expects Marketplace GMV of $1.3 billion for the full year.

Those businesses also contributed to gross-margin improvement, although the quarter included a $34 million benefit from tariff refunds.

Why did BBY stock fall after stronger earnings?

The negative earnings reaction reflected concerns about what comes after the strong second quarter rather than weakness in the headline results.

Best Buy entered the report after gaining nearly 31% in 2026, compared with roughly 12% for the S&P 500. At the same time, enterprise comparable-sales growth slowed from 8% in May to approximately 5% in June before becoming roughly flat in July. August month-to-date comps subsequently improved to the high end of the company's 1%–3% guidance, supported by back-to-school shopping and its anniversary sale.

Computing presents another challenge. Higher memory costs pushed average selling prices up by a mid-teens percentage during Q2, while unit sales declined by a high-single-digit percentage. Management said customer response to the higher prices was slightly better than expected, but computing growth is expected to moderate during the second half as Best Buy laps stronger prior-year comparisons, including demand related to the end of Windows 10 support.

Profitability also remains in focus. Domestic adjusted selling, general and administrative expenses increased by $94 million, largely due to incentive compensation and investments supporting Best Buy Ads, Marketplace and advertising. The company expects approximately $130 million of additional full-year incentive compensation at the high end of its guidance.

Together, those factors help explain why stronger BBY earnings and higher guidance did not translate into a positive stock reaction.

Higher guidance puts the second half in focus

Best Buy raised its fiscal 2027 revenue forecast to $42.3 billion–$42.8 billion from $41.2 billion–$42.1 billion. Adjusted EPS is now expected at $6.70–$6.90, compared with the previous $6.30–$6.60 range.

The change in comparable-sales guidance was particularly notable. Best Buy now expects full-year growth of 1.9%–3%, compared with its previous forecast ranging from a 1% decline to a 1% increase. The adjusted operating income rate is expected at 4.4%–4.5%.

For the third quarter, management expects comparable sales to increase 1%–3%, with an adjusted operating income rate of 4.1%–4.2%. Guidance assumes a tariff refund similar to the $34 million received during Q2.

The next phase therefore puts greater emphasis on the durability of the underlying business trends. Computing faces tougher comparisons and higher prices, while Marketplace and Best Buy Ads are expected to remain modest operating-income contributors. Continued improvement in televisions and appliances could also influence whether broader category growth persists.

What It Means for Investors

Best Buy's quarter presented two contrasting signals.

Operationally, the retailer delivered stronger sales, earnings, comparable sales and margins while raising its fiscal-year outlook. Growth also extended beyond one category, with home theater, mobile phones, emerging technology products, Marketplace and advertising contributing alongside computing.

The stock market reaction shows that those improvements were already being measured against higher expectations after BBY's strong 2026 run. Investors are now focusing on whether Best Buy can maintain positive comparable sales as computing growth moderates, higher memory costs affect pricing and the company moves through the important back-to-school and holiday periods.

The gap between the company's improved outlook and BBY stock's negative earnings reaction makes execution during the second half an important measure of whether the current improvement can persist.

Conclusion

Best Buy's fiscal second quarter showed meaningful improvement across the business. Revenue approached $9.8 billion, comparable sales increased 4.1%, adjusted EPS climbed 15%, and management raised its full-year outlook across revenue, earnings and comparable sales.

But the nearly 5% decline in BBY stock illustrates why the report was about more than an earnings beat. After a strong run for the shares, investors are looking ahead to tougher computing comparisons, higher memory costs and a consumer that remains selective about spending.

Best Buy has raised the bar for fiscal 2027. The next question is whether its broader category growth, expanding Marketplace and advertising businesses, and improving margins can keep the recovery moving as second-half comparisons become more demanding.

FAQs

Why did Best Buy stock fall after its Q2 earnings?

BBY stock fell nearly 5% despite stronger-than-expected results and increased guidance as investors focused on tougher second-half computing comparisons, higher memory costs and whether recent sales momentum can continue.

How did Best Buy perform in the second quarter?

Best Buy reported approximately $9.8 billion in revenue, adjusted earnings of $1.47 per share and comparable-sales growth of 4.1%. Adjusted EPS increased 15% from a year earlier.

What is Best Buy's fiscal 2027 guidance?

Best Buy expects revenue of $42.3 billion–$42.8 billion, comparable-sales growth of 1.9%–3%, an adjusted operating income rate of 4.4%–4.5% and adjusted EPS of $6.70–$6.90.

What drove Best Buy's sales growth?

Computing was the largest comparable-sales contributor, followed by home theater. Emerging categories including AI glasses, trading cards and health rings more than doubled, while mobile phones and major appliances also posted growth.

What could affect Best Buy's second-half performance?

Best Buy expects computing growth to moderate as comparisons become more difficult, while higher memory costs are increasing computing prices. The company is also monitoring value-focused consumer behavior as it moves through the second half.

This article was created with AI assistance and reviewed by an editor. For details, please refer to our Terms of Use.

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