VALUATION HIGHLIGHTS

1. Domestic Segment constitutes 90% of the Trefis price estimate for Best Buy's stock.

WHAT HAS CHANGED?

1. Best Buy Q3 2026 Snapshot

Best Buy (BBY) delivered a mixed but broadly reassuring Q3 FY2026. Revenue rose about 2.4% year-over-year to $9.67 billion, driven by strength in computing, gaming, and mobile-phone sales, while total comparable same-store sales climbed 2.7%, reversing a prior decline. On profitability, adjusted diluted EPS came in at $1.40, up roughly 11% from $1.26 a year ago — a beat versus analyst expectations. However, gross margins were modestly compressed as product margins declined, offset only partially by stable services margins.

Best Buy's FY'25 ended on February 1, 2025

2. Tariff Impact

Best Buy is a closely watched name when it comes to the impact of tariffs since it sells iPhones, TVs, laptops, kitchen appliances and many other consumer electronics that tend to be made in China or other parts of Asia. China continues to be a major source of merchandise, accounting for 30% to 35% of its merchandise. About 25% of its merchandise comes from U.S. or Mexico, which do not have tariffs due to domestic production or exemptions. The remaining roughly 40% comes from other areas, including Vietnam, India, South Korea, and Taiwan.

The vast majority of what the retailer sells — about 97% of its merchandise — is imported by vendors rather than directly by the company. Best Buy has encouraged vendors to manufacture in multiple countries, negotiated lower costs, and adjusted the mix of merchandise that it carries.

3. FY 2026 Guidance

Looking ahead, Best Buy raised its full-year guidance: it now expects fiscal-2026 revenue between $41.65 billion and $41.95 billion, adjusted diluted EPS of $6.25–$6.35, and full-year comparable-sales growth of 0.5%–1.2%. The company also projects a Q4 comparable-sales range of –1% to +1%, reflecting cautious optimism heading into the holiday season.

4. Shopping Patterns

Best Buy has been navigating a challenging trifecta of factors. Customers have bought fewer kitchen appliances as they put off home purchases and projects because of higher interest rates. Some have hesitated to splurge on pricier items because of tariff-related uncertainty or held out on tech replacements as they wait for new or eye-catching items. The company’s annual sales have declined for the past three years.

To spur growth, Best Buy launched a third-party marketplace to offer shoppers a wider selection of consumer electronics, accessories, and more. On the marketplace, sellers who apply for the platform can list their own brands and items on Best Buy’s website and app.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of Best Buy's value that present opportunities for upside or downside to the current Trefis price estimate for Best Buy.

Stores in the U.S.

• Revenue Per Square Foot: Revenue per Square Foot for Best Buy U.S. declined from $1,141 in fiscal 2023 to $1,037 in fiscal 2025, driven by a fall in enterprise comparable sale. The consumer electronics industry felt the pressure of the broader macro environment. Going forward, we expect the figure to gradually increase in the long term. There could be an upside of up to 10% to our price estimate if Best Buy manages to thwart competition and improve this figure significantly to $1,285 by the end of the forecast period.


• Number of Stores: We estimate the number of Best Buy big-box stores in the U.S. to decline in the future. This figure is expected to decrease from 960 in FY 2025 to about 925 by the end of our forecast period. In case Best Buy decides to accelerate store closures and this figure reaches 855 by the end of the forecast period, there could be a downside of about 5% to our price estimate.

For additional details, select a driver above or select a division from the interactive Trefis split for Best Buy at the top of the page.


BUSINESS SUMMARY


Best Buy is the largest specialty retailer of consumer electronics in the U.S., selling a variety of brands of electronic devices such as TVs, home theater systems, cameras, appliances, computers, mobile phones, video games, software, and repair & installation services to consumers across the country under different store brands. It operates a click-and-mortar strategy, wherein it uses online channels as an effective way to boost store sales and allocates any sales made online, to its stores. Best Buy competes primarily with retailers such as Walmart, Amazon, Target, and Costco.


SOURCES OF VALUE


Best Buy US is the largest source of value for Best Buy for the following reasons:


Larger number of Best Buy US stores compared to international stores


Best Buy had 957 stores in FY 2025 in the U.S., whereas the number of international Best Buy stores stood around 160.


KEY TRENDS




Focusing on growing online sales

Best Buy is working hard to remain competitive in the online market. Technological revolution and increasing online penetration have revolutionized the consumer retail industry. Best Buy has been working toward growing its share of the e-commerce market.


Focus on technological innovation to stay competitive


Best Buy has also launched a third-party marketplace to offer online products from other sellers in exchange for a cut of the proceeds. Third-party sellers including Buy.com, Mambate, SF Planet, ANT Online, BeachAudio.com, and Wayfair have signed up for the platform.


Growing Smart TV market

The global Smart TV market size was USD 241 billion in 2024 and is expected to touch USD 400.3 billion by 2032, exhibiting a CAGR of 5.8% during the forecast period. Smart TV ownership is set to cross 1.1 billion households globally by 2026, representing 51% of all households. The increased popularity of content on over-the-top (OTT) services has provided a boost to the smart TV market.
The full HD TV segment continues to assert its dominance by resolution, capturing the largest market share in 2024 -owing to the high-definition picture quality and a wide variety of content supporting it. Full HD TVs provide a resolution of 1920 x 1080 pixels, which has been the industry baseline for many years. This resolution is prevalent as large amounts of existing content support the resolution.


Growth in mobile computing challenges Best Buy's advantage

Mobile computing has grown rapidly in recent times driven by smartphone & tablet adoption. This has stimulated usage of the internet further and consumers can now research products they want to buy from anywhere. This empowerment is challenging the unique advantage that Best Buy has enjoyed till now, which is its trained staff that educates consumers about new products to make better purchase decisions. This trend has affected Best Buy's sales as consumers can potentially research products on the internet and buy them at a cheaper outlet of their choice.

1. Geek Squad Is A Strong Selling Point

Best Buy bought Geek Squad 20 years ago to provide a technical assistance service, with in-store, online, and 24-hour telephone and emergency online support for its customers. Moreover, customers can avail themselves of a wide range of services including smart home installation, appliance repairs, and wearable technology support. Best Buy also allows customers to come into stores to try out products before buying them. Over the years, the company has expanded its services to enable customers to use Geek Squad services for some products purchased at places other than Best Buy. Although the company does not report the exact revenue from Geek Squad, a report suggests that roughly 3% of the company's net sales were attributable to Geek Squad. This translates to more than $1 billion of sales for the company through this channel. In addition, the presence of consulting and installation services for devices that are difficult to configure or physically install also presumably drives traffic to Best Buy stores.