Best Buy Co., Inc. (BBY Quick QuoteBBY - Free Report) delivered better-than-expected first-quarter fiscal 2027 results, with adjusted earnings of $1.28 per share beating the Zacks Consensus Estimate of $1.22 and rising 11.3% year over year. Revenues of $8.94 billion also topped the consensus $8.81 billion and increased 1.9% from the year-ago quarter.

BBY’s Comparable Sales Turn Positive Across Segments

BBY’s enterprise comparable sales rose 2% year over year, reflecting positive comps across the majority of its product categories in the quarter. Management highlighted gains in Best Buy Ads and Marketplace initiatives as meaningful contributors to the better-than-expected performance.

At the segment level, domestic comparable sales increased 1.8%, while international comparable sales advanced 4.7%. Domestic comparable online sales rose 1.4% after growing 2.1% in the prior-year period, indicating steadier digital demand even as overall comps improved. The Zacks Consensus Estimate for domestic comparable sales and international comparable sales reflects growth of 1% and 1.1%, respectively.

BBY’s Profitability Improves

BBY posted a 4.1% adjusted operating margin, up 30 basis points (bps) from 3.8% a year ago. Gross margin was 23.5%, up 10 bps from 23.4%, while SG&A, as a percentage of revenues, improved to 19.5% from 19.6%.

The company recorded a $9 million reduction in restructuring charges compared with $109 million of restructuring charges in the prior-year quarter.

BBY’s Domestic & International Operations

Best Buy’s domestic revenues increased 1.5% to $8.25 billion, with management attributing the lift primarily to comparable sales growth. From a category perspective, gaming, computing, mobile phones and services were the largest weighted drivers, partially offset by a decline in appliances. The segment's revenues surpassed the consensus estimate of $8.18 billion.

Online revenues within the domestic segment were $2.62 billion, and online sales represented 31.7% of domestic revenues, unchanged from the prior year. That mix stability suggests store and digital channels are moving in tandem as the company continues refining its omnichannel model. Best Buy’s domestic gross profit rate was 23.7% compared with 23.5% last year. Management noted that growth in Marketplace and Best Buy Ads, along with improved performance in traditional services offerings, supported the rate, though lower product margin rates remained a headwind.

International revenues rose 7.3% to $687 million, driven by higher comparable sales growth and a favorable foreign-exchange impact. The segment's revenues surpassed the consensus estimate of $637 million. International gross profit rate declined to 21.5% from 22.0%, with lower product margin rates cited as the primary driver of the year-over-year contraction. 

BBY’s Cash Flow Strengthens and Dividend Continues

BBY generated $375 million of cash from operating activities in the quarter, up from $34 million a year earlier. Capital spending totaled $160 million, modestly lower than the prior-year period, while dividends paid were $202 million. The company did not repurchase shares during the quarter.

The balance sheet reflected higher liquidity, with cash and cash equivalents of $1.75 billion at quarter end compared with $1.15 billion a year ago. Inventory rose to $5.60 billion from $5.19 billion.

The company's board authorized a regular quarterly cash dividend of 96 cents per share, payable July 9, 2026, to shareholders of record as of June 18, 2026. Management also outlined a leadership transition, with CEO Corie Barry planning to step down later this year and Jason Bonfig set to become CEO effective Nov. 1, 2026.

Best Buy Reiterates FY27 View

Best Buy reiterated its full-year fiscal 2027 guidance, including revenues of $41.2-$42.1 billion, comparable sales change of (1.0%) to 1.0% and an adjusted operating income rate of 4.3-4.4%. The company also maintained its adjusted earnings outlook of $6.30-$6.60 per share and expects capital expenditures of approximately $750 million.

Management is encouraged about the first-quarter results. Comparable sales started strong in May with month-to-date increase in high-single digits. Comparable sales is expected to be approximately 1% for the fiscal second quarter. Q2 adjusted operating margin is likely to be approximately 3.9%, flat year over year.

This Zacks Rank #4 (Sell) stock has lost 1%  in the pas six months versus the industry's 16.4% decline.

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