Best Buy shares fell 3.94% in pre-market trading on Thursday after the electronics retailer posted second-quarter earnings that exceeded analyst projections but raised concerns over rising costs and compressed margins.
The Minneapolis-based company reported adjusted earnings per share of $1.47 for the fiscal second quarter, surpassing the $1.35 consensus estimate by 12 cents. Revenue totaled $9.78 billion, up 3.6% from the prior year and exceeding the $9.54 billion forecast. Comparable sales increased 4.1% for the period.
Despite the strong top-line performance, the adjusted operating income rate came in at 4.3%, below some investor expectations. The company attributed the pressure to higher compensation costs and increased spending on initiatives such as Marketplace and Best Buy Ads. Domestic segment revenue rose 4.3% to $9.07 billion, supported by a 4.5% comparable sales increase, while the domestic gross profit rate expanded to 24.0% from 23.4%, aided by tariff refunds totaling $34 million.
Best Buy raised its fiscal 2027 adjusted EPS guidance to a range of $6.70 to $6.90, with a midpoint of $6.80, compared with the $6.62 consensus. Full-year revenue guidance was lifted to $42.3 billion to $42.8 billion, up from the $42.12 billion estimate. Comparable sales guidance was increased to a range of 1.9% to 3.0%, an improvement from the prior outlook of -1.0% to 1.0%. For the third quarter, comparable sales are projected to grow between 1.0% and 3.0%, with an adjusted operating income rate of 4.1% to 4.2%.
Product performance was mixed, with gains led by computing, home theater, and emerging categories such as AI glasses, while traditional gaming declined. CEO Corie Barry noted the company outperformed expectations with broad-based growth across major product categories and strong performance in Best Buy Ads and Marketplace initiatives.
