Best Buy's Holiday Quarter Breaks a Winning Streak

Best Buy reported fourth-quarter fiscal 2026 results Tuesday, posting revenue of $13.8 billion, short of the $13.88 billion analysts had expected, while beating on adjusted earnings per share of $2.61 against a $2.47 consensus estimate.

"We are pleased to report better-than-expected profitability for the fourth quarter," CEO Corie Barry said. "Our comparable sales, while within our guidance range, declined 0.8% compared to last year. Our data sources show our overall market share was at least flat, pointing to slightly softer customer demand for our industry during the holiday quarter."

The results snapped a run of improving comparable sales momentum. After declining 0.7% in the first quarter, comparable sales rose 1.6% in the second quarter and accelerated to 2.7% in the third. The holiday quarter, historically the company's most important, came in at negative 0.8%.

Best Buy Bets on AI, Advertising

Meanwhile, the retailer is focusing more on AI experience for customers. Barry pointed to a broadening opportunity across the product lineup. The company also announced partnerships with OpenAI, Google's Universal Commerce Protocol and AI commerce platform Wizard to integrate Best Buy's catalog into AI-powered shopping experiences.

"The idea of AI for the consumer is kind of a long tail space where we will have a unique advantage," she said.

Sales were softer than expected in November and early December before recovering strongly in the final two weeks of December and into January.

Enterprise comparable sales fell approximately 3% in November, improved to negative 0.2% in December and turned positive at 0.4% in January. The company said weather-related store closures also affected results in the final week of the quarter.

Category performance was mixed. Computing posted its eighth consecutive quarter of positive comparable sales, driven by laptops, desktops and accessories. Mobile phones recorded a fourth straight quarter of growth, supported by expanded carrier partnerships. Gaming revenue rose, though at a slower pace than prior quarters. Home theater and appliances both declined.

Despite the top-line miss, profitability held firm. Adjusted operating income reached $695 million, up from $690 million a year earlier, while the domestic gross profit rate came in at 20.9%, flat year over year.

The company's advertising business recorded collections of just over $900 million for the full fiscal year, up more than 7%. Its U.S. digital marketplace generated approximately $300 million in gross merchandise value during the fourth quarter alone.

"This is where ads and marketplace are also very helpful to our model, especially on the gross profit side of things," Barry said. "This is the fuel we are looking for to continue to be able to reinvest in the base business."

For fiscal 2027, Best Buy guided for revenue of $41.2 billion to $42.1 billion, comparable sales in a range of negative 1% to positive 1% and adjusted diluted earnings per share of $6.30 to $6.60. The company plans to open six new domestic stores, its first new store growth in more than a decade, while closing two locations.