What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-18 compared with 2025-03-19 · 408 added, 256 removed, 825 unchanged (45% of the section changed)

Financial Statements and Supplementary Da ta.

Financial Statements and Supplementary Data.

Management's Report on the Consolidated Financial Statements

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Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we assessed the effectiveness of our internal control over financial reporting as of February 1, 2025, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013).

Based on our assessment, we have concluded that our internal control over financial reporting was effective as of February 1, 2025.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we assessed the effectiveness of our internal control over financial reporting as of January 31, 2026, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013).

Based on our assessment, we have concluded that our internal control over financial reporting was effective as of January 31, 2026.

During our assessment, we did not identify any material weaknesses in our internal control over financial reporting.

Deloitte & Touche LLP, the independent registered public accounting firm that audited our consolidated financial statements for the year ended February 1, 2025, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K, has issued an unqualified attestation report on our internal control over financial reporting as of February 1, 2025.

Deloitte & Touche LLP, the independent registered public accounting firm that audited our consolidated financial statements for the year ended January 31, 2026, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K, has issued an unqualified attestation report on our internal control over financial reporting as of January 31, 2026.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of

Best Buy Co., Inc.

To the shareholders and the Board of Directors of Best Buy Co., Inc.

Richfield, Minnesota.

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We have audited the accompanying consolidated balance sheets of Best Buy Co., Inc.

and subsidiaries (the "Company") as of February 1, 2025, and February 3, 2024, the related consolidated statements of earnings, comprehensive income, cash flows and changes in shareholders’ equity for each of the three years in the period ended February 1, 2025, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 1, 2025, and February 3, 2024, and the results of its operations and its cash flows for each of the three fiscal years in the period ended February 1, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of February 1, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 19, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

and subsidiaries (the "Company") as of January 31, 2026 and February 1, 2025, the related consolidated statements of earnings, comprehensive income, cash flows, and changes in shareholders' equity, for each of the three years in the period ended January 31, 2026, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2026 and February 1, 2025, and the results of its operations and its cash flows for each of the three fiscal years in the period ended January 31, 2026, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 18, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting .

Basis for Opinion

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Our audit procedures related to evaluating whether these vendor allowances were recorded in accordance with the terms of the vendor agreements and the completeness and accuracy of deferred vendor allowances included the following, among others:

 We tested the effectiveness of controls over the recording of these vendor allowances, including management's controls over the establishment of vendor arrangements, the calculation of vendor allowances earned, and the determination of the deferred vendor allowances recorded as a reduction to inventory.

 We selected a sample of these vendor allowances recorded as a reduction of cost of sales and (1) recalculated the amount recognized using the terms of the vendor agreement;

• We tested the effectiveness of controls over the recording of vendor allowances, including management's controls over the establishment of vendor arrangements, the calculation of vendor allowances earned, and the determination of the deferred vendor allowances recorded as a reduction to inventory.

• We selected a sample of vendor allowances recorded as a reduction of cost of sales and (1) recalculated the amount recognized using the terms of the vendor agreement;

(2) evaluated, based on the terms of the agreement, if the amount should be deferred and recorded as a reduction of merchandise inventory;

and (3) tested the settlement of the arrangement.

 We tested the amount of these deferred vendor allowances recorded as a reduction to inventory by developing an expectation for the amount and comparing our expectation to the amount recorded by management.

• We tested the amount of deferred vendor allowances recorded as a reduction to inventory by developing an expectation for the amount and comparing our expectation to the amount recorded by management.

Goodwill – Best Buy Health Reporting Unit — Refer to Note 1 and Note 3 to the financial statements.

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The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value.

The goodwill balance was $908 million as of February 1, 2025, of which $416 million was related to the Best Buy Health reporting unit.

The consolidated goodwill balance was $790 million as of January 31, 2026, of which $298 million was related to the Best Buy Health reporting unit.

The Company primarily uses a discounted cash flow analysis to estimate the fair value of the Best Buy Health reporting unit.

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Changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, or both.

The Company recorded a goodwill impairment of $475 million related to the Best Buy Health reporting unit in the year ended February 1, 2025.

The Company recorded a goodwill impairment of $118 million related to the Best Buy Health reporting unit in the year ended January 31, 2026.

Given the significant judgments made by management to estimate the fair value of the Best Buy Health reporting unit, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the forecasts of cash flows, such as revenue growth rates and margin rates, and estimates of the weighted average cost of capital rate, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of

Best Buy Co., Inc.

To the shareholders and the Board of Directors of Best Buy Co., Inc.

Richfield, Minnesota.

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We have audited the internal control over financial reporting of Best Buy Co., Inc.

and subsidiaries (the “Company”) as of February 1, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 1, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended February 1, 2025, of the Company and our report dated March 19, 2025, expressed an unqualified opinion on those financial statements.

and subsidiaries (the "Company") as of January 31, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended January 31, 2026, of the Company and our report dated March 18, 2026, expressed an unqualified opinion on those financial statements.

Basis for Opinion

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$ in millions, except per share amounts

February 1, 2025

February 3, 2024

January 31, 2026 February 1, 2025

Current assets

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Operating lease assets 2,869 2,833

Goodwill 790 908

Other assets 521 695

Total assets $ 14,670 $ 14,782

Liabilities and equity

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Accumulated other comprehensive income 318 300

Total equity 2,964 2,808

Total liabilities and equity $ 14,670 $ 14,782

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$ and shares in millions, except per share amounts

Fiscal Years Ended

February 1, 2025

February 3, 2024

January 28, 2023

Fiscal Years Ended January 31, 2026 February 1, 2025 February 3, 2024

Revenue $ 41,691 $ 41,528 $ 43,452

Cost of sales 32,318 32,143 33,849

Gross profit 9,373 9,385 9,603

Selling, general and administrative expenses 7,623 7,651 7,876

Restructuring charges 190 ( 3 ) 153

Goodwill impairment

Goodwill and intangible asset impairments 171 475 -

Operating income 1,389 1,262 1,574

Other income (expense):

Gain on sale of subsidiary, net

Gain (loss) on disposal of subsidiaries, net ( 6 ) - 21

Investment income and other 68 84 78

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Equity in income of affiliates 2 4 1

Net earnings $ 1,069 $ 927 $ 1,241

Basic earnings per share $ 5.06 $ 4.31 $ 5.70

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Weighted-average common shares outstanding:

Basic 211.0 215.2 217.7

Diluted 212.1 216.6 218.5

See Notes to Consolidated Financial Statements.

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$ in millions

Fiscal Years Ended

February 1, 2025

February 3, 2024

January 28, 2023

Fiscal Years Ended January 31, 2026 February 1, 2025 February 3, 2024

Net earnings $ 1,069 $ 927 $ 1,241

Foreign currency translation adjustments, net of tax 18 ( 17 ) ( 5 )

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$ in millions

Fiscal Years Ended

February 1, 2025

February 3, 2024

January 28, 2023

Fiscal Years Ended January 31, 2026 February 1, 2025 February 3, 2024

Operating activities

Net earnings $ 1,069 $ 927 $ 1,241

Adjustments to reconcile net earnings to total cash provided by operating activities:

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Restructuring charges 190 ( 3 ) 153

Goodwill impairment

Goodwill and intangible asset impairments 171 475 -

Stock-based compensation 139 139 145

Deferred income taxes 60 ( 59 ) ( 214 )

Gain on sale of subsidiary, net

(Gain) loss on disposal of subsidiaries, net 6 - ( 21 )

Long-lived asset impairments 21 2 2

Other, net 14 10 24

Changes in operating assets and liabilities:

Receivables ( 3 ) ( 111 ) 204

Merchandise inventories ( 126 ) ( 155 ) 178

Other assets 34 11 ( 18 )

Accounts payable ( 238 ) 358 ( 1,025 )

Income taxes ( 7 ) ( 212 ) 52

Other liabilities ( 199 ) ( 150 ) ( 174 )

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Purchases of investments ( 1 ) ( 26 ) ( 9 )

Net proceeds from sale of subsidiary

Disposal of subsidiaries ( 27 ) - 14

Sales of investments - 20 7

Other, net 2 8 2

Total cash used in investing activities ( 730 ) ( 704 ) ( 781 )

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Repayments of debt ( 13 ) ( 17 ) ( 19 )

Other, net ( 1 ) ( 2 ) ( 3 )

Total cash used in financing activities ( 1,083 ) ( 1,309 ) ( 1,144 )

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Income taxes paid (includes payments for purchased tax credits of $ 150 million, $ 267 million and $ 103 million, respectively)

$ 284 $ 643 $ 543

Interest paid $ 44 $ 46 $ 51

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$ and shares in millions, except per share amounts

Shares Common

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

‎ Income (Loss)

Balances as of January 29, 2022

Income (Loss) Total

Balances at January 28, 2023 218.1 $ 22 $ 21 $ 2,430 $ 322 $ 2,795

Net earnings - - - 1,241 - 1,241

Other comprehensive loss:

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Common stock dividends, $ 3.68 per share

- - 14 ( 816 ) - ( 802 )

Repurchase of common stock ( 4.7 ) - ( 168 ) ( 172 ) - ( 340 )

Balances as of January 28, 2023

Balances at February 3, 2024 215.4 22 31 2,683 317 3,053

Net earnings - - - 927 - 927

Other comprehensive loss:

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Common stock dividends, $ 3.76 per share

- - 17 ( 824 ) - ( 807 )

Repurchase of common stock ( 5.8 ) - ( 204 ) ( 300 ) - ( 504 )

Balances as of February 3, 2024

Other comprehensive loss:

Balances at February 1, 2025 211.4 22 - 2,486 300 2,808

Net earnings - - - 1,069 - 1,069

Other comprehensive income:

Foreign currency translation adjustments, net of tax - - - - 18 18

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Common stock dividends, $ 3.80 per share

- - 19 ( 820 ) - ( 801 )

Repurchase of common stock ( 4.0 ) - ( 149 ) ( 125 ) - ( 274 )

Balances as of February 1, 2025

Balances at January 31, 2026 209.1 $ 22 $ 14 $ 2,610 $ 318 $ 2,964

See Notes to Consolidated Financial Statements.

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We are driven by our purpose to enrich lives through technology and our vision to personalize and humanize technology solutions for every stage of life.

We accomplish this by leveraging our combination of tech expertise and a human touch to meet our customers’ everyday needs, whether they come to us online, visit our stores or invite us into their homes.

We accomplish this by leveraging our unique combination of tech expertise and a human touch to meet our customers’ everyday needs, whether they come to us online, visit our stores or invite us into their homes.

We have operations in the U.S.

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The Domestic segment is comprised of our operations in all states, districts and territories of the U.S.

and our Best Buy Health business, and includes the brand names Best Buy, Best Buy Ads, Best Buy Business, Best Buy Essentials, Best Buy Health, Current Health, Geek Squad, Imagine That, Insignia, Lively, My Best Buy, My Best Buy Memberships, Pacific Kitchen and Home, TechLiquidators and Yardbird;

and the domain names bestbuy.com, currenthealth.com, lively.com, techliquidators.com and yardbird.com.

Our International segment is comprised of all operations in Canada under the brand names Best Buy, Best Buy Express, Best Buy Mobile, Geek Squad and TechLiquidators and the domain names bestbuy.ca and techliquidators.ca.

and our Best Buy Health business, and includes the brand names Best Buy, Best Buy Ads, Best Buy Business, Best Buy Essentials, Best Buy Health, Best Buy Marketplace, Geek Squad, Imagine That, Insignia, Lively, Jitterbug, My Best Buy, My Best Buy Memberships, Pacific Kitchen and Home, TechLiquidators and Yardbird;

and the domain names bestbuy.com, lively.com, techliquidators.com and yardbird.com.

Our International segment is comprised of all operations in Canada under the brand names Best Buy, Best Buy Ads, Best Buy Business, Best Buy Express, Best Buy Marketplace, Best Buy Mobile, Geek Squad, Insignia and TechLiquidators and the domain names bestbuy.ca and techliquidators.ca.

Our Domestic and International segments generate revenue from the sale of products and services within six revenue categories:

computing and mobile phones, consumer electronics, appliances, entertainment, services and other.

In fiscal 2024, we completed the sale of a Mexico subsidiary subsequent to our exit from operations in Mexico and recognized a $ 21 million gain within Gain on sale of subsidiary, net on our Consolidated Statements of Earnings.

In fiscal 2024, we completed the sale of a Mexico subsidiary subsequent to our exit from operations in Mexico.

Basis of Presentation

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Our fiscal year ends on the Saturday nearest the end of January.

Fiscal 2025, fiscal 2024 and fiscal 2023 ended on February 1, 2025, February 3, 2024, and January 28, 2023, respectively.

Fiscal 2026, fiscal 2025 and fiscal 2024 ended on January 31, 2026, February 1, 2025, and February 3, 2024, respectively.

Fiscal 2026 and fiscal 2025 each included 52 weeks.

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Adopted Accounting Pronouncements

In the fourth quarter of fiscal 2025, we adopted Accounting Standards Update ( “ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , issued by the Financial Accounting Standards Board (“FASB”).

ASU 2023-07 enhances reportable segment disclosure requirements primarily through expanded disclosures around significant segment expenses.

The amendments were applied retrospectively to all prior periods presented in these financial statements.

See Note 13, Segment and Geographic Information, for the applicable new disclosures.

In the fourth quarter of fiscal 2026, we prospectively adopted Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, issued by the Financial Accounting Standards Board ("FASB").

ASU 2023-09 requires annual disclosure of specific categories meeting a quantitative threshold within the income tax rate reconciliation, as well as disaggregation of income taxes paid by jurisdiction.

Refer to Note 10, Income Taxes, for applicable new disclosures.

Unadopted Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which requires disclosure of specific categories meeting a quantitative threshold within the income tax rate reconciliation, as well as disaggregation of income taxes paid by jurisdiction.

This ASU, which can be applied either prospectively or retrospectively, is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the impact of the ASU and expect to include updated income tax disclosures in our fiscal 2026 Form 10-K.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

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Our business is organized into two reportable segments:

Domestic (which is comprised of all states, districts and territories of the U.S.

and our Best Buy Health business ) and International (which is comprised of all operations in Canada).

Domestic and International.

Our Chief Operating Decision Maker (“CODM”) is our Chief Executive Officer.

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Cash, cash equivalents and restricted cash reported on our Consolidated Balance Sheets are reconciled to the total shown on our Consolidated Statements of Cash Flows as follows ($ in millions):

February 1, 2025

February 3, 2024

January 28, 2023

January 31, 2026 February 1, 2025 February 3, 2024

Cash and cash equivalents $ 1,738 $ 1,578 $ 1,447

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Amounts included in restricted cash are primarily restricted to cover product protection plans provided under our membership offerings and self-insurance liabilities.

Receivables consist primarily of amounts due from banks for vendors for various vendor funding programs, customer credit card and debit card transactions, and mobile phone network operators for device sales and commissions.

Receivables consist primarily of amounts due from banks for customer credit card and debit card transactions and vendors for various vendor funding programs.

Receivables are stated at their carrying values, net of a reserve for expected credit losses, which is primarily based on historical collection trends.

Our allowances for uncollectible receivables were $ 26 million and $ 32 million as of February 1, 2025, and February 3, 2024, respectively.

Our allowances for uncollectible receivables were $ 24 million and $ 26 million as of January 31, 2026, and February 1, 2025, respectively.

We had $ 50 million and $ 48 million of write-offs in fiscal 2026 and fiscal 2025, respectively.

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Estimated useful lives by major asset category are as follows (in years):

Asset Category

Asset Category Useful Life

Buildings 5 - 35

Leasehold improvements 2 - 10

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Capitalized software is included in Fixtures and equipment on our Consolidated Balance Sheets.

Costs associated with the acquisition or development of software for internal use are capitalized at cost and amortized over the expected useful life of the software, generally from two year s to five year s.

A subsequent addition, modification or upgrade to internal-use software is capitalized to the extent that it enhances the software's functionality.

Software maintenance and training costs are expensed as incurred.

The costs of developing software for sale to customers are expensed as incurred until technological feasibility is established, which generally leads to expensing substantially all costs.

Costs associated with implementing cloud-computing arrangements that are service contracts are capitalized using methodology similar to internal-use software, but are included in Other assets on our Consolidated Balance Sheets.

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Reporting units are determined by identifying operating segments (or components thereof) that constitute businesses for which discrete financial information is available and is regularly reviewed by segment management.

We have goodwill in two reporting units – Best Buy Domestic and Best Buy Health – with carrying values of $ 492 million and $ 416 million, respectively, as of February 1, 2025, and carrying values of $ 492 million and $ 891 million, respectively, as of February 3, 2024.

In fiscal 2025, we recorded a goodwill impairment related to our Best Buy Health reporting unit.

We have goodwill in two reporting units – Best Buy Domestic and Best Buy Health – with carrying values of $ 492 million and $ 298 million, respectively, as of January 31, 2026, and carrying values of $ 492 million and $ 416 million, respectively, as of February 1, 2025.

We recorded goodwill impairments related to our Best Buy Health reporting unit in fiscal 2025 and in the third quarter of fiscal 2026.

Our impairment testing involves a comparison of the fair value of each reporting unit with its carrying value, including goodwill.

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We monitor the existence of potential impairment indicators throughout the fiscal year and recognize an impairment loss for any portion of the carrying value that is not recoverable.

The goodwill impairment recorded in the fourth quarter of fiscal 2025 related to our Best Buy Health reporting unit was a triggering event to evaluate Best Buy Health intangible assets for impairment.

No intangible asset impairments were identified.

In fiscal 2026, we recorded intangible asset impairments related to Best Buy Health.

We do not amortize indefinite-lived intangible assets, but test for impairment annually in the fiscal fourth quarter or whenever events or circumstances indicate that the carrying value may not be recoverable.

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If the carrying value exceeds its fair value, we recognize an impairment loss in an amount equal to the excess.

In fiscal 2026, we recorded a full impairment related to our only remaining indefinite-lived intangible asset.

Refer to Note 3, Goodwill and Intangible Assets , for additional information.

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Fair Value Hedges

We utilize “receive fixed-rate, pay variable-rate” interest rate swaps to mitigate the effect of interest rate risk on our $ 500 million principal amount of notes due October 1, 2028 (“2028 Notes”) .

We utilize “receive fixed-rate, pay variable-rate” interest rate swaps to mitigate the effect of interest rate risk on our $ 500 million principal amount of notes due October 1, 2028.

Our interest rate swap contracts are considered perfect hedges because the critical terms and notional amounts match those of our fixed-rate debt being hedged and are, therefore, accounted for as fair value hedges using the shortcut method.

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Fair value measurements are based on significant unobservable inputs (Level 3).

Fixed asset fair values are primarily derived using a DCF analysis to estimate the present value of net cash flows that the asset or asset group was expected to generate.

Fixed asset fair values are primarily derived using a DCF analysis to estimate the present value of net cash flows that the asset or asset group is expected to generate.

The key inputs to the DCF analysis generally include our forecasts of net cash generated from investment operations, as well as an appropriate discount rate.

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When we determine that impairment has occurred, the carrying value of the asset is reduced to fair value and the difference is typically recorded within Selling, general and administrative expenses (“SG&A”) or Restructuring charges on our Consolidated Statements of Earnings for non-restructuring and restructuring charges, respectively.

In fiscal 2025, we recorded a goodwill impairment related to our Best Buy Health reporting unit within Goodwill impairment on our Consolidated Statements of Earnings.

Refer to Note 3, Goodwill and Intangible Assets , and Note 4, Fair Value Measurements , for additional information.

In fiscal 2026, we recorded goodwill, intangible asset and tangible fixed asset impairments related to Best Buy Health, as well as asset impairments and other costs as a result of restructuring initiatives that commenced in fiscal 2026.

Refer to Note 2, Restructuring , Note 3, Goodwill and Intangible Assets , and Note 4, Fair Value Measurements , for additional information.

We are self-insured for certain losses related to workers’ compensation, medical, general liability and auto claims;

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Our net self-insured liabilities included on our Consolidated Balance Sheets were as follows ($ in millions):

February 1, 2025

February 3, 2024

January 31, 2026 February 1, 2025

Accrued compensation and related expenses $ 23 $ 23

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Long-term liabilities 82 69

Total $ 161 $ 157

We account for income taxes using the asset and liability method.

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Accrued Liabilities

The major components of accrued liabilities are sales tax liabilities, advertising accruals, insurance liabilities, sales return reserves and customer deposits.

The major components of accrued liabilities are sales tax liabilities, advertising accruals, sales return reserves, insurance liabilities and customer deposits.

Long-Term Liabilities

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Revenue Recognition

We generate substantially all of our revenue from contracts with customers from the sale of products and services, both as a principal and as an agent.

We generate most of our revenue from contracts with customers from the sale of products and services, both as a principal and as an agent.

Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services.

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Accordingly, revenue is recognized on a gross basis.

For certain sales, primarily activation-based software licenses and third-party stored-value cards, we are the sales agent providing access to the content and recognize commission revenue net of amounts due to third parties who fulfill the performance obligation.

For these transactions, commission revenue is typically recorded once customers have taken possession of licenses or cards and can access their benefits.

For certain sales, primarily activation-based software licenses, digital subscriptions and third-party stored-value cards, we are the sales agent providing access to the content and recognize commission revenue net of amounts due to third parties who fulfill the performance obligation.

For these transactions, commission revenue is typically recorded once customers have taken possession of licenses, subscriptions or cards and can access their benefits.

Warranty obligations associated with the sale of our exclusive brands products are assurance-type warranties that are a guarantee of the product’s intended functionality and, therefore, do not represent a distinct performance obligation within the context of the contract.

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Our service contracts are primarily with retail customers, merchandise vendors (for factory warranty repairs) and extended warranty underwriters.

For technical support membership contracts (for example, our My Best Buy Plus ™ or My Best Buy Total ™ memberships), we are responsible for providing support services to customers.

For membership contracts (for example, our My Best Buy Plus™ or My Best Buy Total™ memberships), we are responsible for providing support services to customers.

These contracts have terms ranging from one month to one year and typically contain several performance obligations.

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When insufficient reliable and relevant history is available to estimate usage, we generally recognize revenue ratably over the life of the contract until such history has accumulated.

We provide advertising services to vendors, advertising agencies, third‑party sellers and others, including digital display advertising, sponsored product listings and other marketing solutions.

In most cases, consideration received from vendors is recorded as a reduction of cost of sales because the advertising services are not distinct from the sale of the vendor’s products.

For other arrangements, including those with non‑vendors or where the services are distinct, we recognize the consideration in revenue as services are delivered, generally over the period the advertisements are displayed or the marketing services are performed.

Services - When we are the agent

On behalf of third-party underwriters, we sell various hardware protection plans to customers that provide extended warranty coverage on their device purchases.

Such plans have terms ranging from one month to five year s.

Such plans have terms ranging from one month to five years .

Payment is due at the point of sale.

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Commission revenue from mobile network carriers is reported net of expected cancellations, which we estimate based on historical cancellation rates.

We earn commissions from third-party sellers who offer products to customers on our online marketplace.

Third‑party sellers are primarily responsible for fulfilling the performance obligation to the customer, including product delivery and customer support.

Accordingly, we act as an agent in these transactions and recognize revenue on a net basis when the third party ships the underlying product to the customer.

We earn commissions from third parties that provide advertising services to vendors, advertising agencies and others through programs such as sponsored product listings, paid search placements and other marketing solutions.

The third parties are primarily responsible for fulfilling the performance obligation to the customer, including delivery of the advertisement.

Accordingly, we act as an agent in these transactions and recognize revenue on a net basis as the services are delivered, generally over the period the advertisements are displayed or the marketing services are performed.

Credit Card Revenue

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Stock-Based Compensation

We recognize stock-based compensation expense for the fair value of our stock-based compensation awards, which is determined based on the closing market price of our stock at the date of grant for time-based share awards and Monte-Carlo simulation for market-based share awards.

We recognize stock-based compensation expense for the fair value of our stock-based compensation awards, which is determined based on the closing market price of our stock at the date of grant for time-based and performance-based share awards, and Monte-Carlo simulation for market-based share awards.

Compensation expense is recognized on a straight-line basis over the period in which services are required.

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Comprehensive income (loss) is computed as net earnings plus or minus certain other items that are recorded directly to shareholders’ equity.

Reclassification

Certain reclassifications of immaterial amounts previously reported have been made to the accompanying Consolidated Statements of Cash Flows to maintain consistency and comparability between periods presented.

Restructuring

Restructuring charges were as follows ($ in millions):

2026 2025 2024

Fiscal 2026 Labor and Store Optimization Initiative $ 117 $ - $ -

Best Buy Health Optimization and China Sourcing Initiative 101 - -

Fiscal 2024 Restructuring Initiative ( 28 ) 3 171

Fiscal 2023 Resource Optimization Initiative - ( 6 ) ( 18 )

Mexico Exit and Strategic Realignment

Fiscal 2024 Restructuring Initiative

During the fourth quarter of fiscal 2024, we commenced an enterprise-wide restructuring initiative intended to accomplish the following:

(1) align field labor resources with where customers want to shop to optimize the customer experience;

(2) redirect corporate resources for better alignment with our strategy;

and (3) right-size resources to better align with our revenue outlook for fiscal 2025.

We do not expect to incur material future restructuring charges related to this initiative.

All charges incurred related to this initiative were comprised of employee termination benefits from continuing operations and were presented within Restructuring charges on our Consolidated Statements of Earnings as follows ($ in millions):

Cumulative Amount

‎ February 1, 2025

International

Total $ 190 $ ( 3 ) $ 153

Fiscal 2026 Labor and Store Optimization Initiative

In the second quarter of fiscal 2026, we commenced a restructuring initiative intended to align field resources with changing customer behaviors, close select non-traditional store locations and redirect corporate resources for better alignment with our strategy.

We currently do not expect to incur material future restructuring charges related to this initiative.

All charges incurred related to this initiative were from continuing operations and presented within Restructuring charges on our Consolidated Statements of Earnings.

The composition of restructuring charges incurred related to this initiative were as follows ($ in millions):

Domestic International Total

Termination benefits $ 68 $ 3 $ 71

Asset impairments and other costs (1)

Total $ 114 $ 3 $ 117

(1) Primarily represents asset impairments related to planned store closures, an impairment related to an indefinite-lived tradename and other exit costs.

See Note 3, Goodwill and Intangible Assets , for additional information.

The remaining carrying value of net assets approximates fair value and was immaterial as of January 31, 2026.

Restructuring accrual activity related to this initiative was as follows ($ in millions):

International

Balances as of January 28, 2023

Balances as of February 3, 2024

Termination Benefits

Domestic International Total

Balances at February 1, 2025 $ - $ - $ -

Charges 78 3 81

Cash payments ( 26 ) - ( 26 )

Adjustments (1)

Balances as of February 1, 2025

(1) Represents adjustments to previously planned organizational changes and higher-than-expected employee retention.

Fiscal 2023 Resource Optimization Initiative

During the second quarter of fiscal 2023, we commenced an enterprise-wide initiative to better align our spending with critical strategies and operations, as well as to optimize our cost structure.

( 10 ) - ( 10 )

Balances at January 31, 2026 $ 42 $ 3 $ 45

(1) Represents adjustments primarily related to higher-than-expected employee retention from previously planned organizational changes.

Our restructuring accrual liabilities primarily related to termination benefits of $ 45 million as of January 31, 2026, reflect expected future cash payments primarily during fiscal 2027.

Best Buy Health Optimization and China Sourcing Initiative

In the first quarter of fiscal 2026, we commenced a restructuring initiative primarily focused on optimizing our Best Buy Health business by taking actions to maximize value and improve profitability in light of its performance against our original forecasting.

These actions included the exit of a component of our Best Buy Health business that was finalized during the second quarter of fiscal 2026.

In addition, we also made significant changes to reduce our exposure to tariffs, particularly in China.

We currently do not expect to incur material future restructuring charges related to this initiative.

All charges incurred related to this initiative were from continuing operations in our Domestic segment and presented within Restructuring charges on our Consolidated Statements of Earnings.

The composition of restructuring charges incurred related to this initiative were as follows ($ in millions):

Asset impairments and other costs (1)

Termination benefits 30

(1) Primarily represents the full impairment of net assets related to a component of our Best Buy Health business and other exit costs.

The remaining carrying value of net assets approximates fair value and was immaterial as of January 31, 2026.

Restructuring accrual activity related to this initiative was as follows ($ in millions):

Termination Benefits Asset Impairments and Other Costs Total

Balances at February 1, 2025 $ - $ - $ -

Charges 38 28 66

Cash payments ( 20 ) ( 27 ) ( 47 )

Adjustments (1)

( 8 ) ( 1 ) ( 9 )

Balances at January 31, 2026 $ 10 $ - $ 10

(1) Primarily represents adjustments for termination benefits related to higher-than-expected employee retention from previously planned organizational changes.

Our restructuring accrual liabilities related to termination benefits of $ 10 million as of January 31, 2026, reflect expected future cash payments primarily during fiscal 2027.

Fiscal 2024 Restructuring Initiative

During the fourth quarter of fiscal 2024, we commenced an enterprise-wide restructuring initiative intended to align field labor resources with where customers want to shop and to optimize the customer experience, redirect corporate resources for better alignment with our strategy, and right-size resources to better align with our revenue outlook for fiscal 2025.

We do not expect to incur material future restructuring charges related to this initiative.

Cumulative Amount

‎ February 1, 2025

2026 2025 2024 Cumulative Amount as of January 31, 2026

Domestic $ ( 26 ) $ 3 $ 163 $ 140

International ( 2 ) - 8 6

Total $ ( 28 ) $ 3 $ 171 $ 146

Restructuring accrual activity related to this initiative was as follows ($ in millions):

International

Balances as of January 28, 2023

Domestic International Total

Balances at February 3, 2024 $ 163 $ 8 $ 171

Charges 18 2 20

Cash payments ( 86 ) ( 3 ) ( 89 )

Adjustments (1)

Balances as of February 3, 2024

( 15 ) ( 2 ) ( 17 )

Balances at February 1, 2025 80 5 85

Cash payments ( 23 ) ( 3 ) ( 26 )

Adjustments (1)

( 26 ) ( 2 ) ( 28 )

Balances at January 31, 2026 $ 31 $ - $ 31

(1) Represents adjustments primarily related to higher-than-expected employee retention from previously planned organizational changes.

No material restructuring accrual activity occurred in fiscal 2025 related to this initiative, and no material liability remains as of February 1, 2025.

Our restructuring accrual liabilities related to termination benefits of $ 31 million as of January 31, 2026, reflect expected future cash payments primarily during fiscal 2028.

Goodwill and Intangible Assets

Goodwill balances by segment were as follows ($ in millions):

February 1, 2025

February 3, 2024

Gross Carrying Amount

Cumulative Impairment

Gross Carrying Amount

Cumulative Impairment

January 31, 2026 February 1, 2025

Gross Carrying Amount Cumulative Impairment Gross Carrying Amount Cumulative Impairment

Domestic $ 1,450 $ ( 660 ) $ 1,450 $ ( 542 )

International 608 ( 608 ) 608 ( 608 )

In fiscal 2025, we recorded a goodwill impairment of $ 475 million within the Domestic segment for the Best Buy Health reporting unit.

The impairment was identified during the fourth quarter as a result of our annual impairment review.

This coincides with our annual review of performance against financial and strategic goals, and the annual update of our budget and long-range financial projections.

Fair value for the Best Buy Health reporting unit is estimated primarily based on DCF analysis.

The impairment primarily arose from downward revisions of our revenue growth rates and margin rates compared to projections used in prior years, as the market has not scaled as we originally forecasted.

Total $ 2,058 $ ( 1,268 ) $ 2,058 $ ( 1,150 )

In the third quarter of fiscal 2026, we recorded a goodwill impairment of $ 118 million within the Domestic segment for the Best Buy Health reporting unit.

The carrying value of the Best Buy Health reporting unit as of January 31, 2026, was $ 298 million.

A change in Best Buy Health’s customer base during the third quarter of fiscal 2026 resulted in an impairment review of all Best Buy Health assets.

The fair value of Best Buy Health was estimated primarily based on DCF analysis.

The impairment reflects downward revisions of our revenue growth rates and margin rates compared to previous projections, in part due to pressures in the Medicaid and Medicare Advantage markets.

In addition, definite-lived intangible asset impairments and long-lived asset impairments were also recorded.

Refer to Note 4, Fair Value Measurements , for additional information.

No further impairments were identified in the fourth quarter of fiscal 2026.

Indefinite-Lived Intangible Assets

In the second quarter of fiscal 2025, we reclassified our Yardbird tradename from a definite-lived intangible asset to an indefinite-lived intangible asset to better reflect our expectations of the long-term use of the tradename.

The carrying value of the tradename was $ 16 million as of February 1, 2025, and was recorded within Other assets on our Consolidated Balance Sheets.

In the second quarter of fiscal 2026, we recorded a full impairment of $ 16 million related to our only remaining indefinite-lived intangible asset as a result of restructuring activity that commenced in the second quarter of fiscal 2026.

Refer to Note 2, Restructuring , for additional information.

Definite-Lived Intangible Assets

We have definite-lived intangible assets which are recorded within Other assets on our Consolidated Balance Sheets as follows ($ in millions):

February 1, 2025

February 3, 2024

Weighted-Average

Gross Carrying Amount

Accumulated Amortization

We have definite-lived intangible assets recorded within Other assets on our Consolidated Balance Sheets as follows ($ in millions):

January 31, 2026 February 1, 2025 Weighted-Average

Useful Life Remaining as of January 31, 2026 (in years)

Gross Carrying Amount (1)

Accumulated Amortization (1)

Useful Life Remaining as of February 1, 2025 (in years)

Gross Carrying Amount Accumulated Amortization

Customer relationships (2)

$ 339 $ 339 $ 360 $ 285 -

Tradenames 87 82 92 79 0.7

Developed technology 56 56 64 61 -

Amortization expense was as follows ($ in millions):

Statement of Earnings Location

Total $ 482 $ 477 $ 516 $ 425 0.7

(1) Gross carrying amount and accumulated amortization as of January 31, 2026, excludes $ 34 million and $ 16 million, respectively, of definite-lived intangible assets related to the exit of a component of our Best Buy Health business in the second quarter of fiscal 2026.

See Note 2, Restructuring , for additional information.

(2) Accumulated amortization as of January 31, 2026, includes $ 53 million of impairments related to Best Buy Health included in Goodwill and intangible asset impairments on our Consolidated Statements of Earnings.

Amortization expense, included in SG&A on our Consolidated Statements of Earnings, was as follows ($ in millions):

2026 2025 2024

Amortization expense $ 14 $ 21 $ 61

Amortization expense expected to be recognized in future periods is as follows ($ in millions):

Fair Value Measurements

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Financial assets and liabilities accounted for at fair value were as follows ($ in millions):

Fair Value at

Balance Sheet Location (1)

February 1, 2025

February 3, 2024

Hierarchy Fair Value at

Assets January 31, 2026 February 1, 2025

Money market funds (2)

Cash and cash equivalents

Cash and cash equivalents Level 1 $ 143 $ 439

Time deposits (3)

Cash and cash equivalents

Cash and cash equivalents Level 2 252 150

Commercial paper (2)

Cash and cash equivalents Level 2 37 -

Money market funds (2)

Other current assets

Other current assets Level 1 123 140

Time deposits (3)

Other current assets

Other current assets Level 2 30 50

Marketable securities that fund deferred compensation (4)

Other assets Level 1 41 39

Interest rate swap derivative instruments (5)

Long-term liabilities

Long-term liabilities Level 2 1 14

(1) Balance sheet location is determined by the length to maturity at date of purchase and whether the assets are restricted for particular use.

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Nonrecurring Fair Value Measurements

In fiscal 2025, we recorded a goodwill impairment related to our Best Buy Health reporting unit.

In fiscal 2026, we recorded asset impairments and other costs as a result of restructuring initiatives that commenced in the first and second quarters of fiscal 2026.

Refer to Note 2, Restructuring , for additional information.

In the third quarter of fiscal 2026, we recorded goodwill and definite-lived intangible asset impairments related to Best Buy Health.

Refer to Note 3, Goodwill and Intangible Assets , for additional information.

In addition, we recorded $ 21 million of long-lived asset impairments related to Best Buy Health, included in SG&A on our Consolidated Statements of Earnings.

The remaining carrying value of net long-lived assets subject to impairment approximates fair value and was immaterial as of January 31, 2026.

All nonrecurring fair value remeasurements mentioned above were based on significant unobservable inputs (Level 3).

Fair Value of Financial Instruments

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Long-term debt balances were as follows ($ in millions):

February 1, 2025

February 3, 2024

Carrying Value

January 31, 2026 February 1, 2025

Fair Value Carrying Value Fair Value Carrying Value

Long-term debt (1)

$ 1,089 $ 1,149 $ 1,031 $ 1,136

(1) Excludes debt discounts, issuance costs and finance lease obligations.

Derivative Instruments

We manage our economic and transaction exposure to certain risks by using foreign currency forward contracts to hedge against the effect of Canadian dollar exchange rate fluctuations on a portion of our net investment in our Canadian operations and by using interest rate swaps to mitigate the effect of interest rate risk on our 2028 Notes.

We manage our economic and transaction exposure to certain risks by using foreign exchange forward contracts to hedge against the effect of Canadian dollar exchange rate fluctuations on a portion of our net investment in our Canadian operations and by using interest rate swaps to mitigate interest rate risk on our $ 500 million of principal amount of notes due October 1, 2028.

In addition, we use foreign currency forward contracts not designated as hedging instruments to manage the impact of fluctuations in foreign currency exchange rates relative to recognized receivable and payable balances denominated in non-functional currencies.

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Notional amounts of our derivative instruments were as follows ($ in millions):

Contract Type

February 1, 2025

February 3, 2024

Contract Type January 31, 2026 February 1, 2025

Derivatives designated as net investment hedges $ 119 $ 119

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No hedging designation (foreign exchange contracts) 34 42

Total $ 653 $ 661

Effects of our fair value hedges on our Consolidated Statements of Earnings were as follows ($ in millions):

Gain (Loss) Recognized

Contract Type

Statement of Earnings Location 2026 2025 2024

Interest rate swaps

Interest expense

Adjustments to carrying value of long-term debt

Interest expense

Interest rate swaps Interest expense $ 13 $ ( 3 ) $ ( 4 )

Adjustments to carrying value of long-term debt Interest expense ( 13 ) 3 4

Total $ - $ - $ -

Supplemental balance sheet information related to our leases was as follows ($ in millions):

Balance Sheet Location

February 1, 2025

February 3, 2024

Operating leases

Operating lease assets

Finance leases

Property under finance leases, net (1)

Balance Sheet Location January 31, 2026 February 1, 2025

Operating leases Operating lease assets $ 2,869 $ 2,833

Finance leases Property under finance leases, net (1)

Total lease assets $ 2,911 $ 2,867

Operating leases

Current portion of operating lease liabilities

Finance leases

Current portion of long-term debt

Operating leases

Long-term operating lease liabilities

Finance leases

Long-term debt

Operating leases Current portion of operating lease liabilities $ 623 $ 617

Finance leases Current portion of long-term debt 11 10

Operating leases Long-term operating lease liabilities 2,334 2,282

Finance leases Long-term debt 21 15

Total lease liabilities $ 2,989 $ 2,924

(1) Finance leases were recorded net of accumulated depreciation of $ 54 million and $ 54 million as of February 1, 2025 and February 3, 2024, respectively.

(1) Finance leases were recorded net of accumulated depreciation of $ 38 million and $ 54 million as of January 31, 2026, and February 1, 2025, respectively.

Costs and cash flow impacts associated with our finance leases were immaterial in the periods presented.

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Cost of sales and SG&A (2)

Variable lease cost

Cost of sales and SG&A (2)

Sublease income

$ 790 $ 784 $ 777

Variable lease cost Cost of sales and SG&A (2)

Sublease income SG&A ( 14 ) ( 13 ) ( 11 )

Total operating lease cost $ 1,017 $ 1,007 $ 1,005

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Weighted average discount rate 4.4 % 4.1 %

Future lease payments under our non-cancellable operating leases as of February 1, 2025, were as follows ($ in millions):

Future lease payments under our non-cancellable operating leases as of January 31, 2026, were as follows ($ in millions):

Operating Leases (1)

Fiscal 2027 $ 739

Fiscal 2028 719

Fiscal 2029 578

Fiscal 2030 457

Fiscal 2031 312

Thereafter 542

Total future undiscounted lease payments 3,347

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On April 18, 2025, we entered into a $ 1.25 billion five-year senior unsecured revolving credit facility agreement (the “Five-Year Facility Agreement”) with a syndicate of banks.

The Five-Year Facility Agreement replaced the previous $ 1.25 billion senior unsecured revolving credit facility (the “Previous Facility”) with a syndicate of banks, which was entered into April 2023 and scheduled to expire April 2028, but was terminated on April 18, 2025.

The Five-Year Facility Agreement permits borrowings of up to $ 1.25 billion and expires in April 2030.

There were no borrowings outstanding under the Five-Year Facility Agreement as of February 1, 2025, or February 3, 2024.

The interest rate under the Five-Year Facility Agreement is variable and, absent certain events of default, is determined at our option as:

(i) the sum of (a) the greatest of (1) JPMorgan Chase Bank, N.A.’s prime rate, (2) the greater of the federal funds effective rate and the overnight bank funding rate plus, in each case, 0.5 %, and (3) Adjusted Term Secured Overnight Financing Rate (the “Adjusted Term SOFR” as defined in the Five-Year Facility Agreement) for an interest period of one month plus 1 %, and (b) a variable margin rate (the “ABR Margin”);

There were no borrowings outstanding under the Five-Year Facility Agreement as of January 31, 2026, or the Previous Facility as of February 1, 2025.

The interest rate under the Five-Year Facility Agreement is variable and is determined at our option as:

(i) the sum of (a) the greatest of (1) U.S.

Bank National Association’s prime rate, (2) the greater of the federal funds effective rate and the overnight bank funding rate plus, in each case, 0.5 %, and (3) Adjusted Term Secured Overnight Financing Rate (the “Adjusted Term SOFR”) for an interest period of one month plus 1 %, and (b) a variable margin rate (the “ABR Margin”);

or (ii) Adjusted Term SOFR for the applicable interest period plus a variable margin rate (the “Term SOFR Margin”).

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The Five-Year Facility Agreement is guaranteed by certain of our subsidiaries and contains customary affirmative and negative covenants.

Among other things, these covenants restrict our and certain of our subsidiaries’ abilities to incur liens on certain assets, make material changes in corporate structure or materially alter the nature of our business, dispose of material assets, engage in mergers, consolidations and certain other fundamental changes, or engage in certain transactions with affiliates.

The Five-Year Facility Agreement also contains a covenant that requires the registrant to maintain a maximum quarterly cash flow leverage ratio.

Among other things, these covenants restrict our and certain of our subsidiaries’ abilities to incur liens on certain assets;

make material changes in corporate structure or the nature of our business;

dispose of material assets;

engage in certain mergers, consolidations and certain other fundamental changes;

or engage in certain transactions with affiliates.

The Five-Year Facility Agreement also contains a covenant that requires the company to maintain a maximum quarterly cash flow leverage ratio.

The Five-Year Facility Agreement contains customary default provisions, including, but not limited to, failure to pay interest or principal when due and failure to comply with covenants.

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Long-term debt consisted of the following ($ in millions):

February 1, 2025

February 3, 2024

January 31, 2026 February 1, 2025

2028 Notes $ 500 $ 500

2030 Notes 650 650

Interest rate swap valuation adjustments ( 1 ) ( 14 )

Subtotal 1,149 1,136

Debt discounts and issuance costs ( 5 ) ( 7 )

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See Note 4, Fair Value Measurements , for the fair value of long-term debt.

Other than the 2028 Notes, we do no t have any future maturities of long-term debt within the next five fiscal years.

The 2028 Notes mature in fiscal 2029 and the 2030 Notes mature in fiscal 2031.

Shareholders’ Equity

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The Best Buy Co., Inc.

2020 Omnibus Incentive Plan (the “2020 Plan”) approved by shareholders in June 2020 authorizes us to issue up to 18.6 million shares plus the remaining unused shares available for issuance under the Best Buy Co., Inc.

Amended and Restated 2014 Omnibus Incentive Plan (the “2014 Plan”).

In addition, shares subject to any outstanding awards under our prior stock incentive plans that are forfeited, cancelled or reacquired by the company are available for reissuance under the 2020 Plan.

The 2014 Plan was terminated as to the grant of any additional awards, but prior awards remain outstanding and continue to vest in accordance with the original terms of such plan.

The 2020 Plan authorizes us to grant or issue non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and other equity awards.

We have not granted incentive stock options.

Under the terms of the 2020 Plan, awards may be granted to our employees, officers, advisers, consultants and directors.

2020 Omnibus Incentive Plan (the “2020 Plan”) authorizes us to grant or issue non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and other equity awards to our employees, officers, advisers, consultants and directors.

In addition, shares subject to any outstanding awards under our prior stock incentive plans that are forfeited, cancelled or reacquired by the company are available for issuance under the 2020 Plan.

Awards issued under the 2020 Plan vest as determined by the Compensation and Human Resources Committee of our Board of Directors (“Board”) at the time of grant.

Dividend equivalents accrue on restricted stock and restricted stock units during the vesting period, are forfeitable prior to the vesting date and are settled in shares of our common stock at the vesting or distribution date.

As of February 1, 2025, a total of 9.5 million shares were available for future grants under the 2020 Plan.

As of January 31, 2026, a total of 17.6 million shares were available for future grants under the 2020 Plan.

We have not granted incentive stock options.

Stock-based compensation expense was as follows ($ in millions):

Share awards:

Stock options

2026 2025 2024

Time-based $ 119 $ 122 $ 126

Market-based 16 17 19

Performance-based 4 - -

Stock-based compensation expense 139 139 145

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Information on our time-based share awards was as follows (shares in thousands):

Time-Based Share Awards

Weighted-Average Fair Value per Share

Time-Based Share Awards Shares Weighted-Average Grant Date Fair Value

Outstanding as of February 1, 2025 3,478 $ 79.43

Granted 2,292 $ 72.92

Vested and distributed ( 1,569 ) $ 82.46

Outstanding as of February 1, 2025

Information regardin g the vesting and distribution of time-based share awards was as follows ($ in millions):

Forfeited ( 432 ) $ 76.46

Outstanding as of January 31, 2026 3,769 $ 74.72

Information regarding the vesting and distribution of time-based share awards was as follows ($ in millions):

Time-Based Share Awards 2026 2025 2024

Fair value of awards vested and distributed (1)

$ 115 $ 113 $ 114

Tax benefits realized for tax deductions related to vesting $ 22 $ 23 $ 24

As of February 1, 2025, there was $ 133 million of unrecognized compensation expense related to non-vested time-based share awards that we expect to recognize over a weighted-average period of 1.8 years.

(1) Based on market value on the date of vesting.

As of January 31, 2026, there was $ 135 million of unrecognized compensation expense related to non-vested time-based share awards that we expect to recognize over a weighted-average period of 1.8 years.

Market-Based Share Awards

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Information on our market-based share awards was as follows (shares in thousands):

Market-Based Share Awards

Weighted-Average Fair Value per Share

Market-Based Share Awards Shares Weighted-Average Fair Value per Share

Outstanding as of February 1, 2025 692 $ 92.95

Granted 183 $ 76.71

Adjustment for performance achievement ( 189 ) $ 112.62

Forfeited ( 44 ) $ 82.20

Outstanding as of January 31, 2026 642 $ 83.64

Distributions of market-based share awards in fiscal 2026, fiscal 2025, and fiscal 2024 were not significant.

As of January 31, 2026, there was $ 13 million of unrecognized compensation expense related to non-vested market-based share awards that we expect to recognize over a weighted-average period of 1.6 years.

Performance-Based Share Awards

Performance-based share awards vest upon the achievement of company performance goals based upon certain profitability measures.

The number of shares of common stock that could be distributed at the end of the incentive period may range from 0 % to 150 % of each share granted (“target”).

Shares are granted at 100 % of target.

Awards vest after the performance period, if the profitability measure has been met.

Information on our performance-based share awards was as follows (shares in thousands):

Performance-Based Share Awards Shares Weighted-Average Fair Value per Share

Outstanding as of February 1, 2025 - $ -

Distributions of market-based share awards in fiscal 2025 and fiscal 2024 were not significan t.

Information regarding the vesting and distribution of market-based share awards in fiscal 2023 was as follows ($ in millions):

Market-Based Share Awards

Fair value of awards vested and distributed

Tax benefits realized for tax deductions related to vesting

As of February 1, 2025, there was $ 21 million of unrecognized compensation expense related to non-vested market-based share awards that we expect to recognize over a weighted-average period of 1.7 years.

Granted 202 $ 72.54

Forfeited ( 15 ) $ 73.48

Outstanding as of January 31, 2026 187 $ 72.47

As of January 31, 2026, there was $ 8 million of unrecognized compensation expense related to non-vested performance-based share awards that we expect to recognize over a weighted-average period of 2.0 years.

Earnings per Share

Reconciliations of the numerators and denominators of basic and diluted earnings per share were as follows ($ and shares in millions, except per share amounts):

2026 2025 2024

Net earnings $ 1,069 $ 927 $ 1,241

Weighted-average common shares outstanding 211.0 215.2 217.7

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On February 28, 2022, our Board approved a $ 5.0 billion share repurchase program.

The program had $ 3.3 billion remaining available for repurchases as of February 1, 2025.

The program had $ 3.0 billion remaining available for repurchases as of January 31, 2026.

There is no expiration date governing the period over which we can repurchase shares under this authorization.

Information regarding the shares we repurchased and retired was as follows ($ and shares in millions, except per share amounts):

2026 2025 2024

Total cost of shares repurchased $ 273 $ 500 $ 340

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Number of shares repurchased and retired 4.0 5.8 4.7

We generate substantially all of our revenue from contracts with customers from the sale of products and services.

We generate most of our revenue from contracts with customers from the sale of products and services.

Contract balances primarily relate to unfulfilled membership benefits and services not yet completed, product merchandise not yet delivered to customers, unredeemed gift cards and deferred revenue from our private label and co-branded credit card arrangement.

Contract balances were as follows ($ in millions):

February 1, 2025

February 3, 2024

Receivables (1)

January 31, 2026 February 1, 2025

Receivables, net (1)

Short-term contract liabilities included in:

Unredeemed gift cards

Unredeemed gift card liabilities 235 253

Deferred revenue 900 951

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Long-term liabilities 205 229

(1) Receivables are recorded net of allowances for expected credit losses of $ 20 million and $ 23 million as of February 1, 2025, and February 3, 2024, respectively.

During fiscal 2025 and fiscal 2024, $ 1.1 billion and $ 1.3 billion of revenue was recognized, respectively, that was included in the contract liabilities at the beginning of the respective periods.

(1) Receivables are recorded net of allowances for expected credit losses of $ 17 million and $ 20 million as of January 31, 2026, and February 1, 2025, respectively.

During fiscal 2026 and fiscal 2025, $ 1.1 billion and $ 1.1 billion of revenue was recognized, respectively, that was included in contract liabilities at the beginning of the respective periods.

Estimated revenue from our contract liability balances expected to be recognized in future periods if the performance of the contract is expected to have an initial duration of more than one year is as follows ($ in millions):

Fiscal Year Amount

Fiscal 2027 $ 36

Fiscal 2028 33

Fiscal 2029 28

Fiscal 2030 28

Fiscal 2031 27

Thereafter 89

See Note 13, Segment and Geographic Information , for information on our revenue by segment and category.

Reconciliations of the federal statutory income tax rate to income tax expense were as follows ($ in millions):

Reconciliation of the federal statutory income tax rate to the effective tax rate was as follows ($ in millions):

Amount Percent

federal income tax at the statutory rate $ 295 21.0 %

State and local income taxes, net of federal income tax effect (1)

Foreign tax effects:

China - Statutory tax rate differential ( 20 ) ( 1.4 ) %

Other foreign jurisdictions 8 0.6 %

Effect of cross-border tax laws, net of related foreign tax credits:

Subpart F inclusion 19 1.3 %

Other ( 1 ) ( 0.1 ) %

Nontaxable or nondeductible items:

Goodwill impairment 25 1.8 %

Other 11 0.8 %

Other adjustments:

Exit of a component of Best Buy Health business ( 27 ) ( 1.9 ) %

Other ( 11 ) ( 0.8 ) %

Effective income tax rate $ 337 24.0 %

(1) State and local income taxes in California, Oregon, Texas, New York and Illinois contributed to the majority (greater than 50%) of the tax effect in this category.

Reconciliations of prior year federal statutory income tax rate to the effective tax rate were as follows ($ in millions):

Federal income tax at the statutory rate $ 272 $ 340

State income taxes, net of federal benefit 52 57

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Expense (benefit) from foreign operations 3 ( 5 )

Tax credits ( 23 ) ( 13 )

Goodwill impairments (non-deductible) 63 -

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Earnings before income tax expense and equity in income of affiliates by jurisdiction were as follows ($ in millions):

2026 2025 2024

United States $ 1,223 $ 1,095 $ 1,389

Foreign 181 200 232

Earnings before income tax expense and equity in income of affiliates $ 1,404 $ 1,295 $ 1,621

Income tax expense (benefit) was comprised of the following ($ in millions):

Income tax expense

2026 2025 2024

Federal $ 207 $ 341 $ 452

State 42 67 104

Foreign 28 23 39

Federal 55 ( 55 ) ( 177 )

State 4 ( 7 ) ( 37 )

Foreign 1 3 -

60 ( 59 ) ( 214 )

Total income tax expense $ 337 $ 372 $ 381

Deferred taxes are the result of differences between the bases of assets and liabilities for financial reporting and income tax purposes.

Deferred tax assets and liabilities were comprised of the following ($ in millions):

February 1, 2025

February 3, 2024

January 31, 2026 February 1, 2025

Deferred revenue $ 119 $ 125

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Total deferred tax assets after valuation allowance 1,087 1,129

Property and equipment

Inventory ( 96 ) ( 92 )

Operating lease assets ( 720 ) ( 734 )

Goodwill and intangible assets ( 86 ) ( 61 )

Other ( 21 ) ( 19 )

Total deferred tax liabilities ( 923 ) ( 906 )

Net deferred tax assets $ 164 $ 223

Net deferred tax assets were included in Other assets on our Consolidated Balance Sheets as of February 1, 2025, and February 3, 2024.

As of February 1, 2025, we had deferred tax assets for net operating loss carryforwards from international operations of $ 112 million, of which $ 30 million will expire in various years through 2042 and the remaining amounts have no expiration;

acquired U.S.

federal net operating loss carryforwards of $ 3 million, of which $ 1 million will expire in various years between 2026 and 2029 and the remaining amounts have no expiration;

Net deferred tax assets were included in Other assets on our Consolidated Balance Sheets as of January 31, 2026, and February 1, 2025.

As of January 31, 2026, we had deferred tax assets for net operating loss carryforwards from international operations of $ 93 million, of which $ 31 million will expire in various years through 2043 and the remaining amounts have no expiration;

federal foreign tax credit carryforwards of $ 29 million, which will expire between 2027 and 2036;

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and international capital loss carryforwards of $ 8 million, which have no expiration.

As of February 1, 2025, a valuation allowance of $ 172 million had been established, of which $ 29 million is against U.S.

As of January 31, 2026, a valuation allowance of $ 143 million had been established, of which $ 29 million is against U.S.

federal foreign tax credit carryforwards;

$ 13 million is against international, federal and state capital loss carryforwards;

$ 119 million is against international and state net operating loss carryforwards;

$ 2 million is against international and state credit carryforwards;

and $ 9 million is against other foreign deferred tax assets.

The decrease in fiscal 2025 was primarily due to tax rate changes and releases relating to certain international net operating loss carryforwards, and expirations relating to U.S.

federal foreign tax credit and state credit carryforwards.

These decreases were partially offset by the set-up of additional valuation allowances against certain foreign deferred tax assets and state and international net operating loss carryforwards.

$ 99 million is against international and state net operating loss carryforwards and $ 2 million is against international and state credit carryforwards.

The decrease in valuation allowance in fiscal 2026 was primarily due to disposals relating to certain international and state net operating loss carryforwards and certain other foreign deferred tax assets.

Reconciliations of changes in unrecognized tax benefits were as follows ($ in millions):

2026 2025 2024

Balances at beginning of period $ 145 $ 140 $ 163

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Gross decreases related to prior period tax positions

( 6 ) ( 10 ) ( 11 )

Gross increases related to current period tax positions 17 20 20

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Balances at end of period $ 135 $ 145 $ 140

(1) Represents multi-jurisdiction, multi-year resolutions of certain discrete tax matters.

Unrecognized tax benefits of $ 116 million, $ 121 million and $ 141 million as of February 1, 2025, February 3, 2024, and January 28, 2023, respectively, would favorably impact our effective income tax rate if recognized.

Unrecognized tax benefits of $ 105 million, $ 116 million and $ 121 million as of January 31, 2026, February 1, 2025, and February 3, 2024, respectively, would favorably impact our effective income tax rate if recognized.

We recognize interest and penalties (not included in the unrecognized tax benefits above), as well as interest received from favorable tax settlements, as components of income tax expense.

Interest expense of $ 1 million, interest expense of $ 3 million and interest income of $ 6 million was recognized in fiscal 2025, fiscal 2024 and fiscal 2023, respectively.

As of February 1, 2025, February 3, 2024, and January 28, 2023, we had accrued interest of $ 45 million, $ 43 million and $ 42 million, respectively.

Interest expense of $ 6 million, $ 1 million and $ 3 million was recognized in fiscal 2026, fiscal 2025 and fiscal 2024, respectively.

As of January 31, 2026, February 1, 2025, and February 3, 2024, we had accrued interest of $ 50 million, $ 45 million and $ 43 million, respectively.

We file a consolidated U.S.

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With few exceptions, we are no longer subject to U.S.

federal, state and local, or non-U.S.

income tax examinations by taxing authorities for years before fiscal 2016.

Changes in state, federal and foreign tax laws may increase or decrease our tax contingencies.

The timing of the resolution of income tax examinations and controversies is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts accrued.

It is reasonably possible that within the next twelve months we will receive additional assessments by various taxing authorities or reach resolutions of income tax examinations or controversies in one or more jurisdictions.

These assessments, resolutions or law changes could result in changes to our gross unrecognized tax benefits.

The actual amount of any changes could vary significantly depending on the ultimate timing and nature of any assessments, resolutions or law changes.

An estimate of the amount or range of such changes cannot be made at this time.

federal or state and local income tax examinations by taxing authorities for years before fiscal 2020.

For certain foreign jurisdictions, however, we remain open for examination of fiscal years back to 2011.

Changes in state, federal and foreign tax laws, as well as the timing and outcome of tax examinations, may impact our tax contingencies.

The timing and resolution of these matters is uncertain, and the amounts ultimately paid may differ from our recorded accruals, resulting in a change to our gross unrecognized tax benefits in the period in which the change occurs.

Income taxes paid were as follows ($ in millions):

January 31, 2026

Federal $ 197

State and local 63

(1) Includes payments for purchased tax credits of $ 150 million.

Recently Enacted Tax Legislation

On July 4, 2025, the One Big Beautiful Bill Act ("OB3") was signed into law, amending and extending key provisions of the 2017 Tax Cuts and Jobs Act, including, but not limited to, domestic research expensing, 100% bonus depreciation on tangible property and modifications to the international tax framework.

The provisions reduced our fiscal 2026 cash tax liability but did not have a material impact on our income tax expense.

On February 18, 2026, the U.S.

Treasury and the Internal Revenue Service issued Notice 2026-7, Additional Interim Guidance Regarding the Application of the Corporate Alternative Minimum Tax .

We are currently evaluating the financial impact, including assessing how the adjustments allowed under this notice interact with the tax law changes introduced by OB3.

Benefit Plans

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Amounts contributed and deferred under the plan are invested in options offered under the plan and elected by the participants.

The liability for compensation deferred under the plan was $ 20 million and $ 24 million as of February 1, 2025, and February 3, 2024, respectively, and is included in Long-term liabilities on our Consolidated Balance Sheets.

The liability for compensation deferred under the plan was $ 21 million and $ 20 million as of January 31, 2026, and February 1, 2025, respectively, and is included in Long-term liabilities on our Consolidated Balance Sheets.

See Note 4, Fair Value Measurements , for the fair value of assets held for deferred compensation.

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We provide disclosure of matters where we believe it is reasonably possible the impact may be material to our Consolidated Financial Statements.

We had outstanding letters of credit totaling $ 71 million as of February 1, 2025.

We had outstanding letters of credit totaling $ 76 million as of January 31, 2026.

Segment and Geographic Information

Segment and category revenue information was as follows ($ in millions) :

Revenue information by segment and category was as follows ($ in millions):

2026 2025 2024

Computing and Mobile Phones $ 18,038 $ 17,103 $ 16,930

Consumer Electronics 10,527 11,148 12,014

Appliances 4,166 4,589 5,469

Entertainment 2,811 2,641 3,063

Services 2,466 2,456 2,357

Other 270 301 264

Total Domestic revenue 38,278 38,238 40,097

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Consumer Electronics 933 917 955

Appliances 303 321 335

Entertainment 281 267 300

Services 190 175 173

Other 30 32 40

Total International revenue 3,413 3,290 3,355

Total revenue $ 41,691 $ 41,528 $ 43,452

Our CODM regularly reviews a range of financial and non-financial information to evaluate the performance of, and determine resource allocation for, the consolidated enterprise, the Domestic segment and the International segment.

Adjusted operating income is the primary financial performance measure used by our CODM, which includes revenue and significant expenses – cost of sales and adjusted SG&A.

Our CODM reviews adjusted operating income and its components via the annual budget and the ongoing monitoring of variances to budget, forecasts and prior periods.

Adjusted operating income by segment and the reconciliation to consolidated earnings before income tax expense and equity in income of affiliates were as follows ($ in millions):

International

International Total

Revenue $ 38,278 $ 3,413 $ 41,691

Cost of sales 29,642 2,676 32,318

Adjusted SG&A (2)

6,966 622 7,588

Adjusted operating income $ 1,670 $ 115 1,785

Restructuring charges 190

Goodwill impairment

Goodwill and intangible asset impairments 171

Intangible asset amortization 14

Long-lived asset impairment 21

Operating income 1,389

Other income (expense):

Loss on disposal of subsidiaries ( 6 )

Investment income and other 68

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(1) Domestic segment Adjusted operating income includes certain operations that are based in foreign tax jurisdictions and primarily relate to sourcing products into the U.S.

(2) Adjusted SG&A excludes amortization of definite-lived intangible assets associated with acquisitions.

International

(2) Adjusted SG&A excludes amortization of definite-lived intangible assets associated with acquisitions and non-cash impairments of certain long-lived assets.

International Total

Revenue $ 38,238 $ 3,290 $ 41,528

Cost of sales 29,591 2,552 32,143

Adjusted SG&A (2)

7,000 630 7,630

Adjusted operating income $ 1,647 $ 108 1,755

Restructuring charges ( 3 )

Goodwill impairment 475

Intangible asset amortization 21

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Other income (expense):

Gain on sale of subsidiary, net

Investment income and other 84

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(2) Adjusted SG&A excludes amortization of definite-lived intangible assets associated with acquisitions.

International

International Total

Revenue $ 40,097 $ 3,355 $ 43,452

Cost of sales 31,247 2,602 33,849

Adjusted SG&A (2)

7,175 640 7,815

Adjusted operating income $ 1,675 $ 113 1,788

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Other income (expense):

Gain on sale of subsidiary, net 21

Investment income and other 78

3 unchanged sentences

(2) Adjusted SG&A excludes amortization of definite-lived intangible assets associated with acquisitions.

Asset information by segment was as follows ($ in millions):

International

Cash flow and other expense information by segment was as follows ($ in millions):

2026 2025 2024

Capital expenditures

Domestic $ 623 $ 640 $ 760

International 81 66 35

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Depreciation and amortization

Domestic $ 788 $ 825 $ 880

International 43 41 43

Total depreciation and amortization $ 831 $ 866 $ 923

Asset information by segment was as follows ($ in millions):

Domestic $ 13,407 $ 13,567

International 1,263 1,215

Total assets $ 14,670 $ 14,782

Geographic information was as follows ($ in millions):

2026 2025 2024

Revenue from external customers

$ 38,278 $ 38,238 $ 40,097

Canada 3,413 3,290 3,355

Total revenue from external customers $ 41,691 $ 41,528 $ 43,452

Property and equipment, net

$ 1,822 $ 2,002

Canada 164 120

Total property and equipment, net $ 1,986 $ 2,122

Subsequent Events

During fiscal 2026, U.S.

tariffs were imposed under the International Emergency Economic Powers Act (the “IEEPA”) that applied to certain imported private‑label branded and direct import products that we sold during the year or held in inventory as of the end of the fiscal year.

On February 20, 2026, the U.S.

Supreme Court ruled that tariffs imposed under the IEEPA were unauthorized.

The ruling did not address potential refunds.

Following the ruling, various actions and proceedings have occurred involving U.S.

trade authorities and the U.S.

Court of International Trade relating to the administration, collection and potential refund of tariffs imposed under the IEEPA.

The outcome of these actions, including the timing, process and ultimate recoverability of any refunds, remains uncertain.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data