Best Buy Co Inc. (BBY) shares rallied Tuesday after the electronics retailer delivered third-quarter fiscal 2026 results that beat expectations, showing consumers are finally ready to upgrade their aging tech.
Sales climbed 2.4% year over year to $9.67 billion, topping the consensus estimate of $9.59 billion. Adjusted earnings came in at $1.40 per share, comfortably ahead of the $1.31 analysts were expecting. Comparable sales increased 2.7% year over year, signaling that the upgrade cycle Best Buy has been waiting for is starting to materialize.
The results weren't without complications though. Best Buy Health recorded $192 million in pre-tax non-cash impairments during the quarter, including $171 million related to goodwill and intangibles and another $21 million tied to long-lived assets. The writedowns reflect revised projections amid ongoing pressures in the Medicaid and Medicare Advantage markets.
Where the Growth Is Coming From
Domestic revenue rose 2.1% year over year to $8.88 billion, driven primarily by that 2.4% comparable sales growth. The winners were clear: gaming, computing, and mobile phones delivered the biggest gains on a weighted basis. That makes sense given how old some people's laptops and phones have gotten over the past few years.
Not everything was up though. Home theater and appliances saw declines that partially offset the tech category strength. Domestic online revenue grew 3.5% year over year on a comparable basis to $2.82 billion, representing 31.8% of total domestic revenue.
Margins took a slight hit, with domestic gross profit margin compressing to 23.3% from 23.6% last year, pressured by lower product margins. Meanwhile, international revenue jumped 6.1% year over year to $794 million, led by 6.3% comparable sales growth and revenues from Best Buy Express.
What Management Is Saying
CEO Corie Barry seemed pleased with the momentum. "We delivered sales growth across both online and stores, saw continued improvements in customer experience ratings and launched our Best Buy Marketplace," she said.
She added, "We are flexing the unique strength of our model as customers need to upgrade or replace their consumer electronics and new products and innovation are coming to market."
Capital Returns Continue
Best Buy returned $234 million to shareholders during the third quarter through $199 million in dividends and $35 million in share repurchases. The company expects to buy back around $300 million worth of shares in fiscal 2026.
The board declared a quarterly dividend of $0.95 per share, payable January 6, 2026, to shareholders of record as of December 16, 2025.
Raised Guidance Reflects Confidence
Best Buy raised its fiscal 2026 outlook across the board. The company now expects adjusted EPS of $6.25 to $6.35, up from the previous range of $6.15 to $6.30, compared to the consensus of $6.26. Sales guidance increased to $41.65 billion to $41.95 billion from $41.10 billion to $41.90 billion previously, versus consensus of $41.814 billion.
The comparable sales growth outlook also got a boost, now expected to land between 0.5% and 1.2%, up from the prior range of negative 1% to positive 1%.
For the fourth quarter specifically, Best Buy is projecting comparable sales growth in the range of negative 1.0% to positive 1.0%, with an adjusted operating income rate of 4.8% to 4.9%.
BBY Price Action: Best Buy shares were up 3.81% at $78.50 at the time of publication on Tuesday.
