Best Buy’s second quarter saw revenue and non-GAAP earnings per share exceed Wall Street expectations, but the market responded negatively due to ongoing margin pressures and mixed category performance. Management credited strong sales in gaming—highlighted by the Switch 2 launch—along with computing, mobile phones, and wearables for driving growth. However, these gains were offset by continued softness in home theater, appliances, tablets, and drones. CEO Corie Barry pointed to heightened promotional activity and a shift in sales mix toward lower-margin categories as key reasons for the company’s operating margin decline.
Is now the time to buy BBY? Find out in our full research report (it’s free).
Best Buy (BBY) Q2 CY2025 Highlights:
- Revenue: $9.44 billion vs analyst estimates of $9.23 billion (1.6% year-on-year growth, 2.3% beat)
- Adjusted EPS: $1.28 vs analyst estimates of $1.22 (4.5% beat)
- Adjusted EBITDA: $580 million vs analyst estimates of $550.4 million (6.1% margin, 5.4% beat)
- The company reconfirmed its revenue guidance for the full year of $41.5 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $6.23 at the midpoint
- Operating Margin: 2.7%, down from 4.1% in the same quarter last year
- Locations: 1,105 at quarter end, down from 1,120 in the same quarter last year
- Same-Store Sales rose 1.6% year on year (-2.3% in the same quarter last year)
- Market Capitalization: $15.83 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Best Buy’s Q2 Earnings Call
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Seth Sigman (Barclays) asked about market share trends and category momentum outside of gaming. CEO Corie Barry responded that share was stable overall, with intentional focus on differentiated categories like computing and gaming.
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Katharine Amanda McShane (Goldman Sachs) questioned vendor labor investments and their impact on sales. Barry cited increased vendor investment across labor, training, and in-store experiences, but stopped short of quantifying a direct sales lift.
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Christopher Michael Horvers (JPMorgan) probed the impact of tariffs and promotional pricing on consumer behavior. Barry explained that mitigation strategies—such as supply chain diversification and vendor negotiations—were keeping cost pass-throughs lower than headline tariff rates.
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Michael Lasser (UBS Financial) asked about strategies for stabilizing challenged categories like home theater and appliances. Chief Customer Product and Fulfillment Officer Jason Bonfig highlighted assortment adjustments, targeted marketing, and improved fulfillment speed as ongoing remedies.
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David Lantz (Wells Fargo, for Zach Fadem) inquired about the potential size of the upgrade cycle in computing and how it is reflected in guidance. CFO Matt Bilunas explained that replacement and innovation cycles vary by category and that ongoing momentum is expected in computing and gaming.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will focus on (1) the pace of adoption for Best Buy’s expanded marketplace and its impact on traffic and unit share, (2) the effectiveness of new product launches in gaming and computing, particularly as Windows 10 support ends, and (3) progress in margin stabilization amid higher promotional activity and supply chain adjustments. Execution in vendor partnerships and the scaling of Best Buy Ads will also be important areas to watch.
Best Buy currently trades at $75.35, in line with $75.46 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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