What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-06-05 compared with 2025-12-05 · 124 added, 164 removed, 240 unchanged (55% of the section changed)

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Unless otherwise noted, transactions and other factors significantly impacting our financial condition, results of operations and liquidity are discussed in order of magnitude.

Our MD&A should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended February 1, 2025 (including the information presented therein under Risk Factors ), as well as our other reports on Forms 10-Q and 8-K and other publicly available information.

Our MD&A should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended January 31, 2026 (including the information presented therein under Risk Factors ), as well as our other reports on Forms 10-Q and 8-K and other publicly available information.

All amounts herein are unaudited.

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

Unless otherwise noted, references to years within the MD&A section of this report relate to fiscal years, not calendar years.

Our business, like that of many retailers, is seasonal.

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advertising revenue;

credit card revenue;

commercial sales;

credit card revenue;

gift card breakage;

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advertising revenue and marketplace commission revenue.

Consistent with our comparable sales policy, revenue from Best Buy Express locations rebranded as a result of our previously announced collaboration with Bell Canada is excluded from our comparable sales calculation until locations have been operating for at least 14 full months.

We believe comparable sales is a meaningful supplemental metric for investors to evaluate revenue performance resulting from growth in existing stores and digital offerings versus the portion resulting from opening new stores or closing existing stores.

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As a result, our method of calculating comparable sales may not be the same as other retailers’ methods.

Revenue Category Reclassification

Beginning in the first quarter of fiscal 2027, we reclassified certain amounts within our revenue categories to better align with management's current view of the business.

The reclassification primarily relates to credit card revenue and digital content revenue (including digital gaming, software and subscriptions) that were previously included in various product revenue categories and, following the reclassification, are now included within services revenue.

The reclassification impacts only the presentation of revenue by category and does not affect previously reported total revenue, total comparable sales, net earnings or cash flows.

Revenue mix and comparable sales by revenue category for the three months ended May 3, 2025, have been recast to conform with this reclassification.

The key components of each revenue category are now as follows:

• Computing and Mobile Phones - computing (including desktops, notebooks and peripherals), mobile phones (including related mobile network carrier commissions), networking, tablets (including e-readers) and wearables (including smartwatches);

• Consumer Electronics - digital imaging, health and fitness products, home theater (including accessories, soundbars and televisions), portable audio (including headphones and portable speakers) and smart home;

• Appliances - large appliances (including dishwashers, laundry, ovens and refrigerators) and small appliances (including blenders, coffee makers, vacuums and personal care);

• Entertainment - drones, gaming (including hardware, peripherals and certain software, as well as augmented reality glasses), toys and virtual reality;

• Services - advertising, credit card revenue, digital content (including digital gaming, software and subscriptions), fulfillment, health-related services, installation, marketplace commissions, memberships, repair, technical support and warranty-related services;

• Other - other product offerings (including baby, food and beverage and outdoor living).

Non-GAAP Financial Measures

This MD&A includes financial information prepared in accordance with accounting principles generally accepted in the U.S.

(“GAAP”), as well as certain non-GAAP financial measures, such as consolidated adjusted operating income, consolidated adjusted operating income rate, consolidated adjusted effective tax rate and consolidated adjusted diluted earnings per share (“EPS”).

(“GAAP”), as well as certain non-GAAP financial measures, such as consolidated adjusted selling, general and administrative expenses ("SG&A"), consolidated adjusted SG&A rate, consolidated adjusted operating income, consolidated adjusted operating income rate, consolidated adjusted effective tax rate and consolidated adjusted diluted earnings per share (“EPS”).

We believe that non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, provide additional useful information for evaluating current period performance and assessing future performance.

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We believe the disclosure of revenue changes in constant currency provides useful supplementary information to investors in light of significant fluctuations in currency rates.

Refer to the Non-GAAP Financial Measures section below for detailed reconciliations of items impacting consolidated adjusted operating income, consolidated adjusted effective tax rate and consolidated adjusted diluted EPS in the presented periods.

Refer to the Non-GAAP Financial Measures section below for detailed reconciliations of items impacting consolidated adjusted SG&A, consolidated adjusted operating income, consolidated adjusted effective tax rate and consolidated adjusted diluted EPS in the presented periods.

We continue to monitor developments with respect to tariffs and other trade policy matters closely, including impacts from the U.S.

Supreme Court decision that ruled the tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were unauthorized.

We are participating in the process established by the U.S.

Customs and Border Protection for refunds of tariffs we paid as the importer of record under IEEPA.

The timing and amount of refunds ultimately received is subject to ongoing legal and administrative uncertainty.

Accordingly, we did not recognize any amounts related to these refunds during the three months ended May 2, 2026.

As tariff and trade policy discussions are ongoing and related matters continue to evolve, we cannot predict with certainty their ultimate impact on our business in future periods, including our results of operations and cash flows.

For more information on these risks and uncertainties, see Item 1A, Risk Factors , of our most recent Annual Report on Form 10-K.

Results of Operations

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Selected consolidated financial data was as follows ($ in millions, except per share amounts):

Three Months Ended Nine Months Ended

November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024

Three Months Ended

May 2, 2026 May 3, 2025

Revenue $ 8,936 $ 8,767

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Restructuring charges $ (9) $ 109

Goodwill and intangible asset impairments $ 171 $ - $ 171 $ -

Operating income $ 370 $ 219

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(1) Because retailers vary in how they record costs of operating their supply chain between cost of sales and SG&A, our gross profit rate and SG&A rate may not be comparable to other retailers’ corresponding rates.

For additional information regarding costs classified in cost of sales and SG&A, refer to Note 1, Summary of Significant Accounting Policies , of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 1, 2025.

In the third quarter and first nine months of fiscal 2026, we generated $9.7 billion and $27.9 billion in revenue, respectively, and our comparable sales grew 2.7% and 1.2%, respectively, driven by a mix of new technology innovation, our continued focus on omni-channel customer experience and strong vendor partnerships.

Comparable sales changes in the third quarter and first nine months of fiscal 2026 primarily included comparable sales growth in computing, gaming and mobile phones, partially offset by comparable sales declines in home theater, appliances and drones.

Restructuring charges in the first nine months of fiscal 2026 were primarily associated with a labor and store optimization restructuring initiative that commenced in the second quarter of fiscal 2026 and a restructuring initiative focused on optimizing our Best Buy Health business that commenced in the first quarter of fiscal 2026.

For additional information regarding costs classified in cost of sales and SG&A, refer to Note 1, Summary of Significant Accounting Policies , of the Notes to Consolidated Financial Statements included in Item 8, Financial Statements and Supplementary Data , of our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.

In the first quarter of fiscal 2027, we generated $8.9 billion in revenue and our comparable sales grew 2.0%, primarily driven by comparable sales growth in gaming, computing and mobile phones, partially offset by a comparable sales decline in major appliances.

The comparable sales growth was due to a mix of new technology innovation, our continued focus on omni-channel customer experience and strong vendor partnerships.

We recorded a reduction to restructuring charges in the first quarter of fiscal 2027, primarily related to adjustments for termination benefits associated with a labor and store optimization restructuring initiative that commenced in the second quarter of fiscal 2026.

Refer to Note 2, Restructuring , of the Notes to Consolidated Financial Statements for additional information.

Goodwill and intangible asset impairments in the third quarter and first nine months of fiscal 2026 were related to Best Buy Health.

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 impairments reflect 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.

Refer to Note 3, Goodwill and Intangible Assets , of the Notes to Consolidated Financial Statements, for additional information

Operating income rate decreased in the third quarter of fiscal 2026, primarily due to goodwill and intangible asset impairments.

Operating income rate decreased in the first nine months of fiscal 2026, primarily due to higher restructuring charges and goodwill and intangible asset impairments.

Diluted EPS decreased in the third quarter of fiscal 2026, primarily due to lower net earnings driven by higher goodwill and intangible asset impairments, partially offset by lower income tax expense.

Diluted EPS decreased in the first nine months of fiscal 2026, primarily due to lower net earnings driven by higher restructuring charges and goodwill and intangible asset impairments, partially offset by lower income tax expense.

Revenue, gross profit rate, SG&A rate and operating income rate changes in the third quarter of fiscal 2026 were primarily driven by our Domestic segment.

Revenue, gross profit rate and operating income rate changes in the first nine months of fiscal 2026 were primarily driven by our Domestic segment, and SG&A rate changes in the first nine months of fiscal 2026 were driven by our International segment.

Operating income rate increased in the first quarter of fiscal 2027, primarily due to lower restructuring charges.

Diluted EPS increased in the first quarter of fiscal 2027, primarily due to higher operating income.

Revenue, gross profit rate, SG&A rate and operating income rate changes in the first quarter of fiscal 2027 were primarily driven by our Domestic segment.

For further discussion of our Domestic and International segments, see Segment Performance Summary , below.

Store Summary

Stores open by reportable segment were as follows:

November 1, 2025 November 2, 2024

Stores open by segment were as follows:

May 2, 2026 May 3, 2025

Best Buy 884 886

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As we approach the expiration of leases, we evaluate various options for each location, including whether a store should remain open.

In fiscal 2026, we currently expect to reduce our traditional Domestic Best Buy store count by 5 stores in the normal course of operations.

In fiscal 2026, we closed select non-traditional Domestic store locations in conjunction with our restructuring initiative that commenced in the second quarter of fiscal 2026, with additional closures expected in fiscal 2027.

See Note 2, Restructuring , of the Notes to Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for additional information.

We currently expect to increase our Domestic segment Best Buy store count by an additional four stores by the end of fiscal 2027.

Income Tax Expense

Income tax expense decreased to $64 million in the third quarter of fiscal 2026 compared to $85 million in the third quarter of fiscal 2025, primarily due to lower pre-tax income, partially offset by the impact of certain expenses that are not tax deductible.

Effective tax rate (“ETR”) increased to 31.5% in the third quarter of fiscal 2026 compared to 23.9% in the third quarter of fiscal 2025, primarily due to the impact of certain expenses that are not tax deductible and lower pre-tax income, partially offset by increased tax benefits from resolutions of tax matters.

Income tax expense decreased to $151 million in the first nine months of fiscal 2026 compared to $266 million in the first nine months of fiscal 2025, primarily due to lower pre-tax income and the discrete tax impacts of the restructuring charges and associated exit of a component of our Best Buy Health business, partially offset by the impact of certain expenses that are not tax deductible.

ETR decreased to 22.3% in the first nine months of fiscal 2026 compared to 24.8% in the first nine months of fiscal 2025, primarily due to the discrete tax impacts of the restructuring charges and associated exit of a component of our Best Buy Health business, partially offset by the impact of certain expenses that are not tax deductible and lower pre-tax income.

Income tax expense increased to $102 million in the first quarter of fiscal 2027 compared to $19 million in the first quarter of fiscal 2026, primarily due to the discrete tax impacts of the restructuring charges and the associated exit of a component of our Best Buy Health business in the prior year, as well as higher pre-tax income.

Effective tax rate (“ETR”) increased to 26.9% in the first quarter of fiscal 2027 compared to 8.6% in the first quarter of fiscal 2026, primarily due to these prior-year discrete tax impacts.

See Note 2, Restructuring , of the Notes to Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for additional information.

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Selected financial data for the Domestic segment was as follows ($ in millions):

Three Months Ended Nine Months Ended

November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024

Three Months Ended

May 2, 2026 May 3, 2025

Revenue $ 8,249 $ 8,127

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Adjusted operating income (2)

$ 360 $ 338 $ 1,040 $ 1,027

Adjusted operating income as a % of revenue (4)

4.1 % 3.9 % 4.0 % 4.0 %

Selected Online Revenue Data

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Comparable online sales % change (1)

3.5 % (1.0) % 3.6 % (2.9) %

(1) Comparable online sales are included in the comparable sales calculation.

(2) Represents Domestic segment Adjusted SG&A and Domestic segment Adjusted operating income as reported in accordance with the adoption of Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280) , in the fourth quarter of fiscal 2025.

See our Annual Report on Form 10-K for the fiscal year ended February 1, 2025, for additional information.

(2) Represents segment Adjusted SG&A and segment Adjusted operating income in accordance with Accounting Standards Codification ("ASC") 280, Segment Reporting .

(3) Adjusted SG&A as a % of revenue is calculated as Domestic segment Adjusted SG&A divided by Domestic segment Revenue.

(4) Adjusted operating income as a % of revenue is calculated as Domestic segment Adjusted operating income divided by Domestic segment Revenue.

Domestic segment revenue increased in the third quarter and first nine months of fiscal 2026, primarily driven by comparable sales growth in computing, gaming and mobile phones, partially offset by comparable sales declines in home theater and appliances.

Online revenue of $2.8 billion and $8.3 billion in the third quarter and first nine months of fiscal 2026 increased 3.5% and 3.6%, respectively, on a comparable basis.

Domestic segment revenue increased in the first quarter of fiscal 2027, primarily driven by comparable sales growth in gaming, computing, mobile phones and services, partially offset by a comparable sales decline in appliances.

Online revenue of $2.6 billion in the first quarter of fiscal 2027 increased 1.4% on a comparable basis.

Domestic segment revenue mix percentages and comparable sales percentage changes by revenue category were as follows:

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Three Months Ended Three Months Ended

November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024

May 2, 2026 May 3, 2025 (1)

Computing and Mobile Phones 47 % 46 % 4.2 % 6.1 %

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Appliances 10 % 12 % (13.6) % (8.0) %

Entertainment 6% 5% 14.0 % (18.8) %

Services 10 % 9 % 5.5 % 0.6 %

Entertainment 7 % 5 % 38.1 % (15.2) %

Other - % 1 % (20.1) % (2.7) %

Total 100 % 100 % 1.8 % (0.7) %

(1) Revenue mix and comparable sales by revenue category for the three months ended May 3, 2025, have been recast to conform to the current presentation.

See Revenue Category Reclassificatio n, above, for additional information.

Notable comparable sales changes by revenue category were as follows:

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• Consumer Electronics:

The 2.9% comparable sales decline was driven primarily by home theater.

The 2.7% comparable sales decline was driven primarily by home theater, headphones and portable speakers.

• Appliances:

The 13.6% comparable sales decline was driven primarily by large appliances.

The 5.5% comparable sales growth was driven primarily by Best Buy Marketplace and credit card revenue.

• Entertainment:

The 14.0% comparable sales growth was driven primarily by gaming, partially offset by a comparable sales decline in drones.

The 1.0% comparable sales decline was driven primarily by Best Buy Health service offerings.

Domestic segment gross profit rate decreased in the third quarter of fiscal 2026, primarily due to lower product margin rates, which were partially offset by rate improvement within the services category.

The lower product margin rates were primarily driven by an unfavorable sales mix and increased personalized promotional offers.

Domestic segment gross profit rate decreased in the first nine months of fiscal 2026, primarily due to lower product margin rates and rate pressure within our Best Buy Health business, which were partially offset by rate improvement within the services category.

Domestic segment adjusted SG&A decreased in the third quarter of fiscal 2026, primarily due to lower Best Buy Health expenses, largely offset by higher incentive compensation expense.

Domestic segment adjusted SG&A increased in the first nine months of fiscal 2026, primarily due to higher compensation expense, which includes incentive compensation, partially offset by lower Best Buy Health expenses and favorable fiscal 2026 indirect tax resolutions.

Domestic segment adjusted operating income rate increased in the third quarter of fiscal 2026, primarily due to a favorable adjusted SG&A rate driven by sales leverage, partially offset by an unfavorable gross profit rate.

Domestic segment adjusted operating income rate remained effectively unchanged in the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025, primarily due to a favorable adjusted SG&A rate, offset by an unfavorable gross profit rate.

The 38.1% comparable sales growth was driven primarily by gaming.

Domestic segment gross profit rate increased in the first quarter of fiscal 2027, primarily due to growth in Best Buy Marketplace and Best Buy Ads, and improved financial performance from our traditional services offerings.

These increases were primarily offset by lower product margin rates.

Domestic segment adjusted SG&A increased in the first quarter of fiscal 2027, primarily due to higher expenses related to our Best Buy Marketplace and Best Buy Ads initiatives, and lapping a favorable indirect tax settlement received in the first quarter of fiscal 2026.

These increases were partially offset by lower Best Buy Health expense.

Domestic segment adjusted operating income rate increased in the first quarter of fiscal 2027, primarily due to a favorable gross profit rate.

International Segment

Selected financial data for the International segment was as follows ($ in millions):

Three Months Ended Nine Months Ended

November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024

Three Months Ended

May 2, 2026 May 3, 2025

Revenue $ 687 $ 640

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Adjusted SG&A (1)

$ 153 $ 155 $ 433 $ 436

Adjusted SG&A as a % of revenue (2)

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Adjusted operating income (1)

$ 28 $ 13 $ 50 $ 38

Adjusted operating income as a % of revenue (3)

3.5 % 1.7 % 2.3 % 1.8 %

(1) Represents International segment Adjusted SG&A and International segment Adjusted operating income as reported in accordance with the adoption of ASU 2023-07.

See our Annual Report on Form 10-K for the fiscal year ended February 1, 2025, for additional information.

(1) Represents segment Adjusted SG&A and segment Adjusted operating income in accordance with ASC 280, Segment Reporting .

(2) Adjusted SG&A as a % of revenue is calculated as International segment Adjusted SG&A divided by International segment Revenue.

(3) Adjusted operating income as a % of revenue is calculated as International segment Adjusted operating income divided by International segment Revenue.

International segment revenue increased in the third quarter of fiscal 2026, primarily driven by comparable sales growth in computing and mobile phones, and revenue from Best Buy Express locations excluded from comparable sales that opened in Canada after the second quarter of fiscal 2025.

These increases were partially offset by the negative impact of foreign exchange rates.

International segment revenue increased in the first nine months of fiscal 2026, primarily driven by comparable sales growth in computing, gaming and mobile phones, and revenue from Best Buy Express locations excluded from comparable sales that opened in Canada after the second quarter of fiscal 2025.

These increases were partially offset by the negative impact of foreign exchange rates.

International segment revenue increased in the first quarter of fiscal 2027, primarily driven by comparable sales growth of 4.7% and the favorable impact of foreign exchange rates.

The comparable sales growth was primarily driven by mobile phones, gaming and digital imaging.

International segment revenue mix percentages and comparable sales percentage changes by revenue category were as follows:

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Three Months Ended Three Months Ended

November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024

May 2, 2026 May 3, 2025 (1)

Computing and Mobile Phones 50 % 50 % 6.4 % 1.7 %

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Appliances 8 % 9 % (8.3) % (2.5) %

Entertainment 7% 6% 11.3 % (18.7) %

Services 7 % 7 % 2.5 % 9.0 %

Entertainment 7 % 6 % 19.2 % (17.9) %

Other 2 % 1 % 26.0 % (13.2) %

Total 100 % 100 % 4.7 % (0.7) %

(1) Revenue mix and comparable sales by revenue category for the three months ended May 3, 2025, have been recast to conform to the current presentation.

See Revenue Category Reclassificatio n, above, for additional information.

Notable comparable sales changes by revenue category were as follows:

• Computing and Mobile Phones:

The 9.2% comparable sales growth was driven primarily by computing and mobile phones.

The 6.4% comparable sales growth was driven primarily by mobile phones and computing.

• Consumer Electronics:

The 3.6% comparable sales growth was driven primarily by digital imaging.

The 2.0% comparable sales growth was driven primarily by digital imaging, partially offset by a comparable sales decline in home theater.

• Appliances:

The 8.3% comparable sales decline was driven primarily by large appliances.

The 2.5% comparable sales growth was driven primarily by growth in marketplace and our membership programs, partially offset by a comparable sales decline in digital content.

• Entertainment:

The 19.2% comparable sales growth was driven primarily by gaming.

The 3.9% comparable sales growth was driven primarily by growth in our membership programs.

International segment gross profit rate increased in the third quarter of fiscal 2026, primarily due to favorable supply chain costs.

International segment gross profit rate decreased in the first nine months of fiscal 2026, primarily due to lower product margin rates.

International segment adjusted SG&A decreased in the third quarter of fiscal 2026, primarily due to the favorable impact of foreign exchange rates, partially offset by higher employee compensation expense.

International segment adjusted SG&A decreased in the first nine months of fiscal 2026, primarily due to the favorable impact of foreign exchange rates, partially offset by higher credit card processing fees, expenses associated with Best Buy Express locations that opened after the second quarter of fiscal 2025 and higher employee compensation expense.

International segment adjusted operating income rate increased in the third quarter of fiscal 2026, primarily due to increased leverage from higher sales volumes, which resulted in a favorable adjusted SG&A rate.

International segment adjusted operating income rate increased in the first nine months of fiscal 2026, primarily due to increased leverage from higher sales volumes, which resulted in a favorable adjusted SG&A rate, partially offset by an unfavorable gross profit rate.

Consolidated Non-GAAP Financial Measures

Reconciliations of consolidated operating income, effective tax rate and diluted EPS (GAAP financial measures) to consolidated adjusted operating income, adjusted effective tax rate and adjusted diluted EPS (non-GAAP financial measures), respectively, were as follows ($ in millions, except per share amounts):

Three Months Ended Nine Months Ended

November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024

International segment gross profit rate decreased in the first quarter of fiscal 2027, primarily due to lower product margin rates.

International segment adjusted SG&A increased in the first quarter of fiscal 2027, primarily due to the negative impact of foreign exchange rates and higher depreciation expense.

International segment adjusted operating income rate increased in the first quarter of fiscal 2027, primarily due to increased leverage from higher sales volumes, which resulted in a favorable adjusted SG&A rate, largely offset by an unfavorable gross profit rate.

Non-GAAP Financial Measures

Reconciliations of consolidated SG&A, consolidated operating income, consolidated effective tax rate and consolidated diluted EPS (GAAP financial measures) to consolidated adjusted SG&A, consolidated adjusted operating income, consolidated adjusted effective tax rate and consolidated adjusted diluted EPS (non-GAAP financial measures), respectively, were as follows ($ in millions, except per share amounts):

Three Months Ended

May 2, 2026 May 3, 2025

SG&A $ 1,741 $ 1,721

% of revenue 19.5 % 19.6 %

Intangible asset amortization (1)

Adjusted SG&A $ 1,739 $ 1,716

% of revenue 19.5 % 19.6 %

Operating income $ 370 $ 219

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Intangible asset amortization (1)

Long-lived asset impairment (2)

Restructuring charges (2)

(5) (4) 218 4

Goodwill and intangible asset impairments (2)

Adjusted operating income $ 363 $ 333

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Intangible asset amortization (1)

(0.3) % (0.1) % 0.1 % — %

Long-lived asset impairment (2)

(1.4) % — % 0.2 % — %

Restructuring charges (2)

(1.5) % — % 3.2 % — %

Goodwill and intangible asset impairments (2)

(3.7) % — % 0.5 % — %

Loss on disposal of subsidiaries (4)

— % — % 0.1 % — %

Adjusted effective tax rate 27.0 % 27.0 %

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Intangible asset amortization (1)

0.02 0.02 0.06 0.07

Long-lived asset impairment (2)

0.10 - 0.10 -

Restructuring charges (2)

(0.03) (0.02) 1.02 0.02

Goodwill and intangible asset impairments (2)

0.81 - 0.80 -

Loss on disposal of subsidiaries (4)

Income tax impact of non-GAAP adjustments (3)

(0.16) - (0.66) (0.02)

Adjusted diluted EPS $ 1.28 $ 1.15

For additional information regarding the nature of charges discussed below, refer to Note 2, Restructuring ;

Note 3, Goodwill and Intangible Assets ;

and Note 4, Fair Value Measurements , of the Notes to Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q.

(1) Represents the non-cash amortization of definite-lived intangible assets associated with acquisitions, including customer relationships, tradenames and developed technology assets.

(2) Represents charges incurred related to Best Buy Health, comprised of non-cash impairments of goodwill, intangible assets and certain long-lived assets.

(3) Represents charges and subsequent adjustments for the three and nine months ended November 1, 2025, primarily related to a labor and store optimization initiative that commenced in the second quarter of fiscal 2026, and a restructuring initiative within our Best Buy Health business that commenced in the first quarter of fiscal 2026.

Charges and subsequent adjustments for the three and nine months ended November 2, 2024, primarily related to an enterprise-wide restructuring initiative that commenced in the fourth quarter of fiscal 2024.

(4) Primarily represents the loss on disposal of a component of our Best Buy Health business.

For additional information regarding the nature of certain charges discussed below, refer to Note 2, Restructuring, of the Notes to Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q.

(1) Represents the non-cash amortization of definite-lived intangible assets associated with acquisitions, including customer relationships and tradenames.

(2) Amounts for the three months ended May 2, 2026, primarily related to subsequent adjustments to a labor and store optimization restructuring initiative that commenced in the second quarter of fiscal 2026.

Charges for the three months ended May 3, 2025, primarily related to a restructuring initiative within our Best Buy Health business that commenced in the first quarter of fiscal 2026.

(3) The non-GAAP adjustments primarily relate to the U.S.

As such, the forecasted annual income tax on a portion of the U.S.

As such, the forecasted annual income tax on the U.S.

non-GAAP adjustments is calculated using the statutory tax rate of 24.5%, adjusted for tax benefits discrete to the period.

There is no forecasted annual income tax for a portion of the U.S.

non-GAAP adjustments, as there is no forecasted annual tax benefit on the expenses in the calculation of GAAP income tax expense.

Adjusted operating income rate increased in the third quarter of fiscal 2026, primarily due to a favorable SG&A rate, partially offset by an unfavorable gross profit rate.

Adjusted operating income rate in the first nine months of fiscal 2026 remained effectively unchanged from the first nine months of fiscal 2025.

Adjusted effective tax rate increased in the third quarter of fiscal 2026, primarily due to decreased tax benefits from green energy incentives and increased U.S.

taxes from sourcing operations, partially offset by increased tax benefits from resolutions of tax matters.

Adjusted effective tax rate increased in the first nine months of fiscal 2026, primarily due to decreased tax benefits from green energy incentives and resolutions of tax matters, as well as increased U.S.

taxes from sourcing operations.

Adjusted diluted EPS increased in the third quarter of fiscal 2026, primarily due to higher adjusted operating income.

Adjusted diluted EPS increased in the first nine months of fiscal 2026, primarily due to higher adjusted operating income and lower diluted weighted-average common shares outstanding, partially offset by the impact of the higher adjusted effective tax rate and lower investment income.

Liquidity and Capital Resources

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Cash and cash equivalents were as follows ($ in millions):

November 1, 2025 February 1, 2025 November 2, 2024

May 2, 2026 January 31, 2026 May 3, 2025

Cash and cash equivalents $ 1,749 $ 1,738 $ 1,147

The decrease in cash and cash equivalents from February 1, 2025, was primarily due to dividend payments, the timing and volume of inventory purchases and payments, capital expenditures and share repurchases, partially offset by cash flows related to earnings.

The increase in cash and cash equivalents from November 2, 2024, was primarily due to positive cash flows from operations, primarily driven by earnings, partially offset by dividend payments, capital expenditures and share repurchases.

The increases in cash and cash equivalents from January 31, 2026, and May 3, 2025, were primarily due to positive operating cash flows from earnings, partially offset by dividend payments and capital expenditures.

Cash flows were as follows ($ in millions):

Nine Months Ended

November 1, 2025 November 2, 2024

Three Months Ended

May 2, 2026 May 3, 2025

Total cash provided by (used in):

3 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents - 4

Decrease in cash, cash equivalents and restricted cash $ (674) $ (855)

Increase (decrease) in cash, cash equivalents and restricted cash $ 13 $ (433)

Operating Activities

The increase in cash provided by operating activities in the first nine months of fiscal 2026 was primarily driven by an increase in net earnings adjusted for non-cash items, partially offset by the timing and volume of inventory purchases and payments.

The increase in cash provided by operating activities in the first quarter of fiscal 2027 was primarily driven by higher cash outflows from accounts payable in the prior year due to the timing and volume of inventory purchases and payments.

Investing Activities

The increase in cash used in investing activities in the first nine months of fiscal 2026 was primarily due to the disposal of a component of our Best Buy Health business.

The decrease in cash used in investing activities in the first quarter of fiscal 2027 was primarily driven by lower capital expenditures.

Financing Activities

The decrease in cash used in financing activities in the first nine months of fiscal 2026 was primarily driven by lower share repurchases.

The decrease in cash used in financing activities in the first quarter of fiscal 2027 was primarily driven by lower share repurchases.

Sources of Liquidity

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There can be no assurance that we will continue to generate cash flows at or above current levels or that we will be able to maintain our ability to borrow under our existing credit facilities or obtain additional financing, if necessary, on favorable terms.

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 in 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 November 1, 2025, or the Previous Facility as of February 1, 2025, or November 2, 2024.

We have a $1.25 billion five-year senior unsecured revolving credit facility agreement (the “Five-Year Facility Agreement”) with a syndicate of banks that expires in April 2030.

There were no borrowings outstanding under the Five-Year Facility Agreement as of May 2, 2026, January 31, 2026, or May 3, 2025.

Restricted Cash

Our liquidity is also affected by restricted cash balances that are primarily restricted to cover product protection plans provided under our membership offerings and self-insurance liabilities.

Restricted cash, which is included in Other current assets on our Condensed Consolidated Balance Sheets, was $271 million, $290 million and $295 million as of November 1, 2025, February 1, 2025, and November 2, 2024, respectively.

The decreases in restricted cash from February 1, 2025, and November 2, 2024 were primarily due to releases of product protection reserves based on claims and purchasing behaviors of customers participating in our membership offerings.

Restricted cash, which is included in Other current assets on our Condensed Consolidated Balance Sheets, remained relatively consistent at $287 million, $285 million and $288 million as of May 2, 2026, January 31, 2026, and May 3, 2025, respectively .

Debt and Capital

As of November 1, 2025, we had $500 million of principal amount of notes due October 1, 2028, and $650 million of principal amount of notes due October 1, 2030.

Refer to Note 6, Debt , of the Notes to Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q, and Note 8, Debt , of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 1, 2025, for additional information about our outstanding debt.

As of May 2, 2026, we had $500 million of principal amount of notes due October 1, 2028, and $650 million of principal amount of notes due October 1, 2030.

Refer to Note 6, Debt , of the Notes to Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q, and Note 7, Debt , of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026, for additional information about our outstanding debt.

Share Repurchases and Dividends

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Share repurchase and dividend activity were as follows ($ and shares in millions, except per share amounts):

Three Months Ended Nine Months Ended

November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024

Three Months Ended

May 2, 2026 May 3, 2025

Total cost of shares repurchased $ - $ 100

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Cash dividends declared and paid $ 202 $ 202

The total cost of shares repurchased decreased in the third quarter of fiscal 2026, due to decreases in the volume of repurchases and the average price per share.

The total cost of shares repurchased decreased in the first nine months of fiscal 2026, due to decreases in the average price per share and the volume of repurchases .

Cash dividends declared and paid decreased in the third quarter and first nine months of fiscal 2026, due to fewer shares outstanding, partially offset by increases in the regular quarterly cash dividend per share.

There were no shares repurchased in the first quarter of fiscal 2027.

Cash dividends declared and paid remained effectively unchanged in the first quarter of fiscal 2027, as the increase in the regular quarterly cash dividend per share was offset by fewer shares outstanding.

Off-Balance-Sheet Arrangements and Contractual Obligations

Our liquidity is not dependent on the use of off-balance-sheet financing arrangements other than in connection with our $1.25 billion in undrawn capacity on our Five-Year Facility Agreement as of November 1, 2025, which, if drawn upon, would be included in either short-term or long-term debt on our Condensed Consolidated Balance Sheets.

Our liquidity is not dependent on the use of off-balance-sheet financing arrangements other than in connection with our $1.25 billion in undrawn capacity on our Five-Year Facility Agreement as of May 2, 2026, which, if drawn upon, would be included in either short-term or long-term debt on our Condensed Consolidated Balance Sheets.

There has been no material change in our contractual obligations other than in the ordinary course of business since the end of fiscal 2026.

See our Annual Report on Form 10-K for the fiscal year ended February 1, 2025, for additional information regarding our off-balance-sheet arrangements and contractual obligations.

See our Annual Report on Form 10-K for the fiscal year ended January 31, 2026, for additional information regarding our off-balance-sheet arrangements and contractual obligations.

Significant Accounting Policies and Estimates

We describe our significant accounting policies in Note 1, Summary of Significant Accounting Policies , of the Notes to Consolidated Financial Statements, and our critical accounting estimates in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , in our Annual Report on Form 10-K for the fiscal year ended February 1, 2025.

Other than the goodwill impairment recorded in the third quarter of fiscal 2026 for the Best Buy Health reporting unit, there have been no significant changes in our significant accounting policies or critical accounting estimates since the end of fiscal 2025.

See Note 3, Goodwill and Intangible Assets , of the Notes to Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q.

There have been no significant changes in our significant accounting policies or critical accounting estimates since the end of fiscal 2026.

New or Recently Issued Accounting Pronouncements

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Among the factors that could cause actual results and outcomes to differ materially from those contained in such forward-looking statements are the following:

macroeconomic pressures in the markets in which we operate (including but not limited to recession, inflation rates, fluctuations in foreign currency exchange rates, limitations on a government’s ability to borrow and/or spend capital, fluctuations in housing prices, energy markets, jobless rates, the imposition of tariffs, trade wars and effects related to the conflicts in Eastern Europe and the Middle East, supply chain disruptions or other geopolitical events);

macroeconomic pressures in the markets in which we operate (including but not limited to real GDP growth, inflation, recession, consumer confidence, employment levels, effects of the government closures, cost of living, uncertainty over the availability of government benefits, tax rates, availability of consumer financing, interest rates, housing market conditions, foreign currency exchange rates, the price of oil, gas and other commodities and other macroeconomic trends);

geopolitical pressures (including issues related to trade routes, political instability and divisiveness, the potential implementation of more restrictive trade policies, tariff increases and/or volatility, the realignment of alliances or the renegotiation of existing trade agreements);

catastrophic events, health crises and pandemics;

susceptibility of the products we sell to technological advancements, product life cycle fluctuations and changes in consumer preferences;

competition (including from multi-channel retailers, e-commerce business, technology service providers, traditional store-based retailers, vendors and mobile network carriers and in the provision of delivery speed and options);

our ability to attract and retain qualified employees;

changes in market compensation rates;

our expansion into health and new products, services and technologies;

competition (including from multi-channel retailers, e-commerce business, technology service providers, traditional store-based retailers, vendors and mobile network carriers, in the provision of delivery speed and options and with the strategic use of artificial intelligence);

our ability to attract and retain qualified employees and changes in market compensation rates;

our focus on services as a strategic priority;

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our ability to maintain positive brand perception and recognition;

our ability to effectively manage strategic ventures, alliances or acquisitions;

our ability to effectively manage our real estate portfolio;

inability of vendors or service providers to perform components of our supply chain (impacting our stores or other aspects of our operations) and other various functions of our business;

risks arising from and potentially unique to our exclusive brands products;

risks associated with vendors that source products outside of the U.S.;

our ability to effectively identify, manage and execute enterprise-wide strategies, such as strategic ventures, alliances or acquisitions;

our ability to effectively manage our infrastructure, real estate portfolio and market segmentation strategy;

interruptions and other factors affecting our supply chain (impacting our stores or other aspects of our operations);

our utilization of third-party vendors for certain aspects of our operations;

risks associated with the products we sell, including those products sold on our Marketplace platforms and products under our exclusive brand labels;

our reliance on our information technology systems, internet and telecommunications access and capabilities;

our ability to prevent or effectively respond to a cyber-attack, privacy or security breach;

product safety and quality concerns;

changes to labor or employment laws or regulations;

risks arising from statutory, regulatory and legal developments (including statutes and/or regulations related to tax or privacy);

evolving corporate governance and public disclosure regulations and expectations (including, but not limited to, cybersecurity and environmental, social and governance matters);

risks arising from our international activities (including those related to the conflicts in Eastern Europe and the Middle East, fluctuations in foreign currency exchange rates, the imposition of tariffs and trade wars) and those of our vendors;

statutory, regulatory and legal developments (including statutes and/or regulations related to tax or privacy);

evolving corporate governance and public disclosure regulations and expectations (including, but not limited to, cybersecurity and corporate responsibility and sustainability matters);

risks arising from our international activities (including fluctuations in foreign currency exchange rates);

failure to meet any financial performance guidance or other forward-looking statements;

failure to effectively manage our costs;

our dependence on cash flows and net earnings generated during the fourth fiscal quarter;

pricing investments and promotional activity;

economic or regulatory developments that might affect our ability to provide attractive promotional financing;

constraints in the capital markets;

changes to our vendor credit terms;

changes in our credit ratings;

and failure to meet financial-performance guidance or other forward-looking statements.

We caution that the foregoing list of important factors is not

constraints in the banking and capital markets;

and changes in our credit ratings.

We caution that the foregoing list of important factors is not complete.

Any forward-looking statements speak only as of the date they are made and we assume no obligation to update any forward-looking statement that we may make.

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-Q

Item 2. Management’s Discussion and Analysis