Executive Summary
Best Buy reported QQ1 2026 revenue of $8.767 billion, with gross profit of $2.049 billion and a gross margin of 23.37%. Operating income registered $219 million and net income was $202 million, corresponding to an EPS of $0.95. Year-over-year, top-line declined 0.9% while gross profit fell 0.4%, but the company delivered a meaningful QoQ improvement in net income and EPS (+72.6% and +72.7%, respectively) after a seasonally weak prior quarter. The quarterly operating margin stood at roughly 2.50%, reflecting ongoing cost pressures and mix effects in a promotional environment. Free cash flow remained negative at approximately $(132) million, driven by working capital movements and ongoing capital expenditure, while cash from operations was modest at $34 million and capex totaled $166 million. The balance sheet shows a liquid position complemented by a debt burden, with total debt of $4.051 billion and net debt of $2.904 billion, against cash and cash equivalents of $1.147 billion and total assets of $14.128 billion. Management underscored a continued focus on cost discipline, margin management, and growth in services and online channels, though formal full-year revenue guidance was not highlighted in the disclosed materials. This report synthesizes the QQ1 2026 results, management commentary themes, competitive context, and an investment thesis grounded in quantitative and qualitative factors.
Key Performance Indicators
QoQ: -37.15% | YoY:-0.90%
QoQ: -29.78% | YoY:-0.44%
QoQ: 72.65% | YoY:-17.89%
QoQ: 72.73% | YoY:-16.67%
Key Insights
Revenue: $8.767B (YoY -0.90%; QoQ -37.15%)
Gross Profit: $2.049B (Gross margin 23.37%; YoY -0.44%; QoQ -29.78%)
Operating Income: $219M (Operating margin ~2.50%; YoY -33.03%; QoQ +0.92%)
Net Income: $202M (Net margin ~2.30%; YoY -17.89%; QoQ +72.65%)
EPS: $0.95 (YoY -16.67%; QoQ +72.73%)
EBITDA: $445M (EBITDA margin ~5.08%)
Free Cash Flow: $(132)M (CFO $34M; Capex $166M)
Cash at End of Period: $1.435B
Cash Flow / Balance Sheet: Total assets $14.128B; Total liabilities $11.365B; Total equity $2.7...
Financial Highlights
Revenue: $8.767B (YoY -0.90%; QoQ -37.15%)
Gross Profit: $2.049B (Gross margin 23.37%; YoY -0.44%; QoQ -29.78%)
Operating Income: $219M (Operating margin ~2.50%; YoY -33.03%; QoQ +0.92%)
Net Income: $202M (Net margin ~2.30%; YoY -17.89%; QoQ +72.65%)
EPS: $0.95 (YoY -16.67%; QoQ +72.73%)
EBITDA: $445M (EBITDA margin ~5.08%)
Free Cash Flow: $(132)M (CFO $34M; Capex $166M)
Cash at End of Period: $1.435B
Cash Flow / Balance Sheet: Total assets $14.128B; Total liabilities $11.365B; Total equity $2.763B; Total debt $4.051B; Net debt $2.904B
Inventory: $5.194B; Current assets $7.585B; Current liabilities $7.412B; Current ratio ~1.02
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
8.77B |
-0.90% |
-37.15% |
| Gross Profit |
2.05B |
-0.44% |
-29.78% |
| Operating Income |
219.00M |
-33.03% |
0.92% |
| Net Income |
202.00M |
-17.89% |
72.65% |
| EPS |
0.95 |
-16.67% |
72.73% |
Management Commentary
Management themes from the QQ1 2026 earnings call (summarized):
- Strategy and growth: Emphasis on optimizing the store footprint while accelerating online and omni-channel capabilities, with ongoing investments in services and protection offerings to support higher-margin revenue streams.
- Operations and costs: Focus on margin discipline and cost containment amid promotional pressures; continued emphasis on inventory management and working capital optimization.
- Market conditions: A challenging but stable consumer environment for technology and home electronics, with promotional activity and channel mix influencing quarterly results.
- Long-term trajectory: Commitment to margin expansion through mix shift to higher-margin services, accessories, and AI-enabled customer experiences within omnichannel flows.
Note: Specific verbatim quotes from the transcript are not provided in the data set supplied.
Forward Guidance
Management did not publish new explicit numerical guidance in the provided QQ1 2026 materials. However, the commentary framework suggests a continued focus on: (i) sustaining cost discipline to protect margins in a promotional environment, (ii) expanding services-led revenue (Geek Squad, protection plans, health-related offerings where applicable) to lift gross margins and profitability, and (iii) growing online and omni-channel penetration to offset store-related costs. External industry trends indicate ongoing demand for consumer electronics cyclicals, but with sensitivity to macro softness and promotional intensity. Investors should monitor: trajectory of gross margin stability, service revenue growth, online penetration, store productivity initiatives, and the pace of deleveraging or financing flexibility given the debt level and negative free cash flow.