Best Buy boosts profit as holiday sales slip

Best Buy (BBY) reported higher fourth quarter earnings even as revenue declined slightly during its key holiday shopping period. Enterprise revenue for the quarter ended 31 January 2026 totaled $13.81 billion, down from $13.94 billion a year earlier and below Wall Street expectations of $13.88 billion, according to Bloomberg consensus data.

Net earnings rose to $541 million from $117 million in the prior-year quarter, while operating income increased to $721 million. This lifted the operating margin to 5.2% of revenue, compared with 1.6% a year ago. Basic earnings per share climbed to $2.58 from $0.55 and diluted EPS to $2.56 from $0.54.

On an adjusted basis, earnings per share were $2.61, topping Wall Street’s forecast of $2.46. Best Buy (BBY) CEO Corie Barry said company data indicated overall market share was at least flat, pointing to softer customer demand for the consumer electronics industry during the holiday quarter.

Same-store sales declined 0.8% in the fourth quarter, compared with Wall Street expectations for a 0.2% increase after two consecutive quarters of positive growth. For the full year, same-store sales grew 0.5%, below the 0.9% increase analysts had anticipated.

Barry described customers as resilient but “definitely deal-focused.” She noted that more than 50% of Best Buy’s customers have annual incomes above $100,000. The company expects first quarter same-store sales to return to growth, forecasting a 1% increase.

Domestic revenue reached $12.57 billion in the quarter, down from $12.71 billion a year earlier. Domestic online revenue was $4.91 billion, declining 2.3% on a comparable basis and representing 39% of domestic revenue, slightly below 39.5% in the prior year.

The domestic gross profit rate was 20.9%, roughly unchanged year over year. The company said growth in Best Buy Ads and Marketplace was largely offset by lower product margin rates.

International revenue was $1.23 billion, broadly flat compared with the prior-year period. A 0.5% increase driven mainly by favorable foreign exchange was partly offset by a 1.3% drop in comparable sales. International gross profit rate declined to 20.5% from 21.4%.

For the full fiscal year, revenue was $41.69 billion, slightly above $41.52 billion a year earlier but just below Wall Street’s expectation of $41.76 billion. Gross profit eased to $9.373 billion from $9.385 billion, with gross margin narrowing to 22.5% from 22.6%.

Operating income for the year rose to $1.389 billion from $1.262 billion, while net earnings increased to $1.069 billion from $927 million. Adjusted earnings per share came in at $6.43, beating analyst estimates of $6.31 by $0.12.

Best Buy shares, which are down more than 30% over the past year, rose more than 8% in early trading following the results.

For fiscal 2027, Best Buy expects revenue in a range of $41.2 billion to $42.1 billion. The company projects same-store sales between a 1% decline and a 1% increase for the year.

Adjusted diluted earnings per share are forecast between $6.30 and $6.60. Management expects strength in computing and mobile phones, which posted 5.4% growth in the fourth quarter, to continue into 2026.

Barry said the company is monitoring rising memory costs amid heightened demand. She noted that Best Buy is pulling in inventory, providing manufacturers with longer forecast horizons, working on appropriate price points for consumers, and educating customers about available options.