Best Buy Raises Annual Outlook as Computing Sales Drive Growth
Best Buy raised its full-year revenue outlook to a range of $42.3B to $42.8B on Thursday after a stronger-than-expected fiscal second quarter.
Comparable sales rose 4.1% in the quarter ended Aug. 1, well above the company's own prior forecast of 1% growth. Total revenue climbed 3.6% while adjusted earnings per share came in at $1.47.
Computing was the biggest sales driver, growing for a tenth consecutive quarter, with home theater and a collection of emerging categories also contributing.
AI glasses, health rings, and trading cards more than doubled in sales during the period. Appliances remained a weak spot, pressured by a strained housing market that pushed customers toward lower-cost replacements.
Despite the beat, shares fell roughly 6% in Thursday trading. The stock had already rallied about 30% year-to-date through the prior close, and investors were quick to flag that the profit forecast lift was partly driven by a one-time $34M tariff refund.
Outgoing CEO Corie Barry was explicit about the refund on the earnings call, saying the company wanted full transparency so analysts could isolate the strength of the underlying business.
"We are trying to be very transparent so that everyone can easily do the math and understand what those quantities are."
Corie Barry, Best Buy
AI integration expands beyond gadgets
Best Buy has been building out its technology infrastructure alongside its product mix. The company recently completed a commerce integration with OpenAI, allowing customers to discover products and complete purchases directly within ChatGPT.
It also rolled out an in-house AI assistant called Ask Blue, which helps customers compare products, check compatibility, and connect to live specialists.
In stores, Best Buy has implemented more than half of the 50 Meta Lab spaces it announced in June, each spanning roughly 900 square feet and staffed by employees focused exclusively on the Meta ecosystem. Incoming CEO Jason Bonfig said early customer response has exceeded expectations.
Bonfig, currently the company's chief customer, product and fulfillment officer, takes the CEO role Nov. 1. The company also recently named former Nordstrom executive Anne Bramman as its new finance chief.
Rising memory chip prices are adding cost pressure heading into the back half of the year. Bonfig noted that average selling prices for chips rose in the mid-single digits during the quarter, while unit volumes fell in the high single digits.
Higher fuel costs are also expected to weigh on margins. Computing growth is also likely to moderate in the second half, as last year's numbers were boosted by the Windows 10 end-of-life cycle.