AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 18/10/2026
Moat31
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 1/4 · Stores and service brands support differentiation, but disclosed lower-cost competition and price matching constrain economic protection. No demonstrated cost leadership, network effect or protected access is established.
durability · 1/4 · The footprint persists but declined from 1,125 stores in fiscal 2024 to 1,068 in fiscal 2026. Realized Health impairments qualify the service expansion thesis. Neither observation alone proves erosion of the core franchise, but durable competitive protection remains weak.
customer dependency · 1/4 · Membership benefits and unfinished services establish customer relationships, but not substantial exit costs. Price matching and alternative direct channels indicate fragile dependence; no renewal or lock-in evidence establishes stronger protection.
erosion resilience · 2/4 · Domestic comparable-sales growth and higher adjusted operating income demonstrate recent resilience despite competitive pressure. These results counter a simple erosion narrative, but a short recovery and realized Health impairments do not establish durable resistance.
Pricing power44
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 1/4 · Ongoing competitor-price monitoring and an implemented price-matching policy support weak pricing discretion. This assessment uses observed pricing practice rather than a measured selling-price decline; the passages do not quantify realized discounts or premiums.
retention · 2/4 · Domestic comparable sales rose 3.2% in the first half and 4.5% in the second quarter, with services comparable sales up 6.4% in the quarter. This is indirect evidence of continuing customer demand, not measured customer retention. The services category also includes credit-card and digital-content revenue.
margin resilience · 2/4 · Domestic first-half gross margin improved from 23.4% to 23.9%, and consolidated adjusted operating margin rose from 3.9% to 4.2%. However, International fiscal 2026 gross margin fell from 22.4% to 21.6%, and much of the GAAP earnings improvement reflects lower restructuring charges. Resilience is mixed and does not prove pricing power.
contractual freedom · 2/4 · Best Buy centrally manages merchandise pricing and promotions, demonstrating operating discretion. Its price-matching policy constrains practical terms, while the supplied passages do not establish detailed contractual repricing rights for memberships or services.
Predictability81
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 25.00
- Revenue growth volatility (pp)
- 3.92
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 1.17
Financial strength82
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 100.00
- netDebtEbitGrade
- 100.00
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 28.59
- Debt / FCF (x)
- 0.93
- Net debt / operating income (x)
- -0.40
- Interest coverage (x)
- 29.55
- Current ratio (x)
- 1.11
Capital allocation100
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 57.22
- 3-year average dilution (%)
- -2.09
- 3-year average SBC / revenue (%)
- 0.33
- cashConversionGrade
- 100.00
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · First-half operating cash flow of $1,296 million covered $344 million of capital spending, $405 million of dividends and $36 million of cash repurchases. Working-capital and tax timing contributed to the cash improvement. Realized Health impairments and restructuring after performance missed original forecasts offset evidence of restrained cash deployment.
incentive alignment · 3/4 · Actual fiscal 2026 LTI awards were split equally between performance shares and time-based shares; performance shares use three-year relative TSR and operating-income growth. Below-target financial results produced a below-target STI score and actual CEO payment. Ownership-guideline compliance and hedging restrictions strengthen alignment, although time-based awards and the qualitative incentive component limit it.
execution · 2/4 · Recent comparable-sales and adjusted-profit gains provide indirect operating evidence of improved execution. Fiscal 2026 revenue and operating-income incentive targets were missed, while Health impairments and corrective restructuring demonstrate earlier shortcomings. Management's attribution of growth to its initiatives is not required to establish the reported improvement.
governance · 3/4 · Disclosures establish an independent compensation committee, actual related-party approval procedures, no supermajority voting requirements and an adopted mandatory restatement clawback. Independent attestation supports effective financial controls. These are strong demonstrated arrangements, without evidence sufficient to call governance exceptional or all safeguards proven in contested situations.
Evidence
Store Development We had 1,068 stores at the end of fiscal 2026 throughout our Domestic and International segments.
Item 1, Business / Store Development · Filed 18/03/2026
Intellectual Property We own or have the right to use valuable intellectual property such as trademarks, service marks and trade names, including, but not limited to, Best Buy, Best Buy Ads, Best Buy Business, Best Buy Essentials, Best Buy Express, Best Buy Health, Best Buy Marketplace, Geek Squad, Imagine That, Insignia, Jitterbug, Lively, Magnolia, My Best Buy, My Best Buy Memberships, Pacific Kitchen and Home, Pacific Sales, Rocketfish, TechLiquidators, Yardbird and our Yellow Tag logo.
Item 1, Business / Intellectual Property · Filed 18/03/2026
We believe our ability to help customers online, in our stores and in their homes, and to connect technology product and solutions with customer needs, provide us key competitive advantages.
Item 1, Business / Competition / management assessment · Filed 18/03/2026
Some of our competitors have lower cost operating structures and seek to compete for sales primarily on price.
Item 1, Business / Competition / lower-cost competitors · Filed 18/03/2026
In addition, we have price-matching policies that allow customers to request that we match a price offered by certain retail stores and online operators.
Item 1, Business / Competition / price-matching policy · Filed 18/03/2026
We carefully monitor pricing offered by other retailers and service providers, as maintaining price competitiveness is one of our ongoing priorities.
Item 1, Business / Competition / pricing priorities · Filed 18/03/2026
Digital technology enables consumers to compare prices on a real-time basis, putting additional pressure on us to maintain competitive prices.
Item 1A, Risk Factors / Competition / real-time price comparison · Filed 19/03/2025
20 Table of Contents Segment Performance Summary Domestic Segment Selected financial data for the Domestic segment was as follows ($ in millions): Three Months Ended Six Months Ended August 1, 2026 August 2, 2025 August 1, 2026 August 2, 2025 Revenue $ 9,070 $ 8,698 $ 17,319 $ 16,825 Revenue % change 4.3 % 0.9 % 2.9 % - % Comparable sales % change(1) 4.5 % 1.1 % 3.2 % 0.2 % Gross profit $ 2,180 $ 2,033 $ 4,134 $ 3,941 Gross profit as a % of revenue 24.0 % 23.4 % 23.9 % 23.4 % Adjusted SG&A(2) $ 1,776 $ 1,682 $ 3,372 $ 3,261 Adjusted SG&A as a % of revenue(3) 19.6 % 19.3 % 19.5 % 19.4 % Adjusted operating income(2) $ 404 $ 351 $ 762 $ 680 Adjusted operating income as a % of revenue(4) 4.5 % 4.0 % 4.4 % 4.0 % Selected Online Revenue Data Total online revenue $ 3,002 $ 2,856 $ 5,618 $ 5,435 Online revenue as a % of total segment revenue 33.1 % 32.8 % 32.4 % 32.3 % Comparable online sales % change(1) 5.1 % 5.1 % 3.4 % 3.7 % (1)Comparable online sales are included in the comparable sales calculation.
Item 2, MD&A / Domestic Segment Performance Summary · Filed 04/09/2026
23 Table of Contents 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 Six Months Ended August 1, 2026 August 2, 2025 August 1, 2026 August 2, 2025 SG&A $ 1,923 $ 1,829 $ 3,664 $ 3,550 % of revenue 19.7 % 19.4 % 19.6 % 19.5 % Intangible asset amortization(1) (2) (4) (4) (9) Adjusted SG&A $ 1,921 $ 1,825 $ 3,660 $ 3,541 % of revenue 19.6 % 19.3 % 19.6 % 19.5 % Operating income $ 421 $ 251 $ 791 $ 470 % of revenue 4.3 % 2.7 % 4.2 % 2.6 % Intangible asset amortization(1) 2 4 4 9 Restructuring charges(2) (6) 114 (15) 223 Adjusted operating income $ 417 $ 369 $ 780 $ 702 % of revenue 4.3 % 3.9 % 4.2 % 3.9 % Effective tax rate 27.1 % 26.8 % 27.0 % 18.3 % Intangible asset amortization(1) - % - % - % 0.2 % Restructuring charges(2) - % 0.9 % - % 8.7 % Loss on disposal of subsidiaries(3) - % 0.1 % - % 0.2 % Adjusted effective tax rate 27.1 % 27.8 % 27.0 % 27.4 % Diluted EPS $ 1.48 $ 0.87 $ 2.79 $ 1.82 Intangible asset amortization(1) 0.01 0.02 0.02 0.04 Restructuring charges(2) (0.02) 0.54 (0.07) 1.05 Loss on disposal of subsidiaries(3) - 0.02 - 0.02 Income tax impact of non-GAAP adjustments(4) - (0.17) 0.01 (0.50) Adjusted diluted EPS $ 1.47 $ 1.28 $ 2.75 $ 2.43 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.
Item 2, MD&A / Non-GAAP Financial Measures / operating income reconciliation · Filed 04/09/2026
Domestic segment revenue mix percentages and comparable sales percentage changes by revenue category were as follows: Revenue Mix Comparable Sales Three Months Ended Three Months Ended August 1, 2026 August 2, 2025(1) August 1, 2026 August 2, 2025(1) Computing and Mobile Phones 46 % 44 % 6.8 % 3.8 % Consumer Electronics 27 % 27 % 5.6 % (5.2) % Appliances 12 % 12 % 0.2 % (9.2) % Services 9 % 9 % 6.4 % 3.7 % Entertainment 6 % 7 % (6.3) % 39.3 % Other - % 1 % (21.1) % (18.4) % Total 100 % 100 % 4.5 % 1.1 % (1) Revenue mix and comparable sales by revenue category for the three months ended August 2, 2025, have been recast to conform to the current presentation.
Item 2, MD&A / Domestic revenue categories and comparable sales · Filed 04/09/2026
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.
Note 11, Segments / Revenue Category Reclassification · Filed 04/09/2026
5 Table of Contents Condensed Consolidated Statements of Cash Flows $ in millions (unaudited) Six Months Ended August 1, 2026 August 2, 2025 Operating activities Net earnings $ 591 $ 388 Adjustments to reconcile net earnings to total cash provided by operating activities: Depreciation and amortization 389 422 Restructuring charges (15) 223 Stock-based compensation 74 75 Deferred income taxes 15 45 Loss on disposal of subsidiaries - 4 Other, net 1 4 Changes in operating assets and liabilities: Receivables 119 123 Merchandise inventories (1,079) (717) Other assets 19 (24) Accounts payable 1,259 693 Income taxes (3) (167) Other liabilities (74) (286) Total cash provided by operating activities 1,296 783 Investing activities Additions to property and equipment (344) (341) Disposal of subsidiary - (27) Other, net 5 (1) Total cash used in investing activities (339) (369) Financing activities Repurchase of common stock (36) (165) Dividends paid (405) (403) Other, net (2) (6) Total cash used in financing activities (443) (574) Effect of exchange rate changes on cash and cash equivalents (3) 5 Increase (decrease) in cash, cash equivalents and restricted cash 511 (155) Cash, cash equivalents and restricted cash at beginning of period 2,023 1,868 Cash, cash equivalents and restricted cash at end of period $ 2,534 $ 1,713 See Notes to Condensed Consolidated Financial Statements.
Condensed Consolidated Statements of Cash Flows / six months ended August 1, 2026 · Filed 04/09/2026
Cash Flows Cash flows were as follows ($ in millions): Six Months Ended August 1, 2026 August 2, 2025 Total cash provided by (used in): Operating activities $ 1,296 $ 783 Investing activities (339) (369) Financing activities (443) (574) Effect of exchange rate changes on cash and cash equivalents (3) 5 Increase (decrease) in cash, cash equivalents and restricted cash $ 511 $ (155) Operating Activities The increase in cash provided by operating activities in the first six months of fiscal 2027 was primarily driven by the timing and volume of inventory purchases and payments, and the timing of income tax payments.
Item 2, MD&A / Cash Flows / Operating Activities · Filed 04/09/2026
Hartman Secretary April 30, 2026 92 2026 Proxy Statement TABLE OF CONTENTS Reconciliations of Non-GAAP Financial Measures Reconciliations of consolidated operating income and diluted earnings per share (“EPS”) (GAAP financial measures) to consolidated adjusted operating income and adjusted diluted EPS (non-GAAP financial measures), respectively, were as follows ($ in millions, except per share amounts): Fiscal Year 2026 Operating income $1,389 % of revenue 3.3% Intangible asset amortization(1) 14 Long-lived asset impairment(2) 21 Restructuring charges(3) 190 Goodwill and intangible asset impairments(2) 171 Adjusted operating income $1,785 % of revenue 4.3% Diluted EPS $5.04 Intangible asset amortization(1) 0.07 Long-lived asset impairment(2) 0.10 Restructuring charges(3) 0.90 Goodwill and intangible asset impairments(2) 0.81 Loss on disposal of subsidiaries(4) 0.03 Loss on investments, net 0.03 Income tax impact of non-GAAP adjustments(5) (0.55) Adjusted diluted EPS $6.43 For additional information regarding the nature of charges discussed below, refer to Note 1, Summary of Significant Accounting Policies; Note 2, Restructuring, Note 3, Goodwill and Intangible Assets, and Note 4, Fair Value Measurements, of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.
Schedule / fiscal 2026 GAAP and non-GAAP reconciliation / impairment and restructuring charges · Filed 30/04/2026
Best Buy Health Optimization and China Sourcing Initiative In the first quarter of fiscal 2026, we commenced a restructuring initiative primarily focused on optimizing our Best Buy Health business by taking actions to maximize value and improve profitability in light of its performance against our original forecasting.
Note 2, Restructuring / Best Buy Health Optimization and China Sourcing Initiative · Filed 04/09/2026
Metric ($ in millions) Threshold Target Maximum Actual Result Metric Score Compensable Enterprise Operating Income(1) (45%) $1,576 $1,854 $2,132 $1,781 0.74 Compensable Enterprise Revenue(2) (45%) 40,133 42,246 44,358 41,595 0.79 Shared Success(3) (10%) N/A N/A N/A 1.50 Fiscal 2026 Blended Score: 0.8407 (1) Compensable Enterprise Operating Income was determined based on adjusted operating income of $1,785 million as reported in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026, adjusted for differences from targeted foreign exchange rates.
Executive and Director Compensation / fiscal 2026 STI targets and actual results · Filed 30/04/2026
Performance Share Awards: The performance share awards are earned based on two equally weighted metrics: total shareholder return (“TSR”) relative to the S&P 500 Index constituents and enterprise operating income growth, both over a three-year period.
Executive and Director Compensation / Performance Share Awards / three-year metrics · Filed 30/04/2026
As of the end of fiscal 2026, each NEO and director was in compliance with the guidelines.
Executive and Director Compensation / ownership guideline compliance · Filed 30/04/2026
Our directors and executive officers are prohibited from hedging and pledging Company securities.
Proxy Summary / prohibition on hedging and pledging · Filed 30/04/2026
Munce Richelle P. Parham Compensation and Human Resources Committee Interlocks and Insider Participation The Compensation Committee is comprised entirely of independent directors.
Compensation Committee / director independence · Filed 30/04/2026
Each of the transactions discussed below were approved (or re-approved if ongoing) by the Audit Committee and the Board in March 2026, unless otherwise noted, in accordance with our Related Party Transactions Policy.
Certain Relationships and Related Party Transactions / actual committee and Board approvals · Filed 30/04/2026
We do not have supermajority shareholder vote requirements in our Articles.
Corporate Governance / shareholder voting requirements · Filed 30/04/2026
This separate policy provides that, upon the occurrence of an accounting restatement of the Company’s financial statements to correct an error, the Compensation Committee must recoup incentive-based compensation that was erroneously granted, earned, or vested to our current and former “officers” (as defined under Rule 16a-1 of the Exchange Act) based wholly or in part upon the attainment of any financial reporting measure, subject to limited exceptions.
Executive and Director Compensation / adopted clawback policy · Filed 30/04/2026
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.
Item 9A, Controls and Procedures / independent attestation on internal controls · Filed 18/03/2026
Development of merchandise and service offerings, pricing and promotions, procurement and supply chain, online and mobile application operations, marketing and advertising and labor deployment across all channels are centrally managed.
Item 1, Business / Operations / centralized pricing and promotions · Filed 18/03/2026
We compete against many local, regional, national and international retailers (both online and brick and mortar), as well as against some of our vendors and mobile network carriers that are leveraging their own direct-to-customer channels to market and sell products.
Item 1A, Strategic Risks / competing retail and vendor direct channels · Filed 18/03/2026
We had 1,125 stores at the end of fiscal 2024 throughout our Domestic and International segments.
Item 1, Business / Store Development / fiscal 2024 store count · Filed 15/03/2024
International Segment Selected financial data for the International segment was as follows ($ in millions): 2026 2025 2024 Revenue $ 3,413 $ 3,290 $ 3,355 Revenue % change 3.7 % (1.9) % (4.3) % Comparable sales % change 2.3 % (0.5) % (3.2) % Gross profit $ 737 $ 738 $ 753 Gross profit as a % of revenue 21.6 % 22.4 % 22.4 % Adjusted SG&A(1) $ 622 $ 630 $ 640 Adjusted SG&A as a % of revenue(2) 18.2 % 19.1 % 19.1 % Adjusted operating income(1) $ 115 $ 108 $ 113 Adjusted operating income as a % of revenue(3) 3.4 % 3.3 % 3.4 % (1)Represents segment Adjusted SG&A and segment Adjusted operating income in accordance with ASC 280, Segment Reporting.
Item 7, MD&A / International Segment / three-year results · Filed 18/03/2026
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.
Note 9, Revenue / composition of customer contract balances · Filed 18/03/2026
In fiscal 2026, all NEOs received 50% of their annual LTI award in performance shares and 50% in time-based restricted shares.
Executive and Director Compensation / actual fiscal 2026 LTI award mix · Filed 30/04/2026
Barry $1,300,000 200% $2,600,000 0.8407 $2,185,820 Mr.
Executive and Director Compensation / CEO fiscal 2026 STI payment · Filed 30/04/2026
(2) Represents charges incurred related to Best Buy Health, comprised of non-cash impairments of goodwill, intangible assets and certain long-lived assets.
Schedule / identification of Best Buy Health impairment charges · Filed 30/04/2026
