Growth returns as appliances stabilize and marketplace momentum builds.
- Best Buy posted a 4.1% comparable sales increase in Q2 FY27, helped by computing and home theater.
- The company expects Best Buy Marketplace to reach $1.3 billion in GMV for the full year.
- Major appliances showed slight sales growth, marking a material improvement from prior quarter declines.
- Computing growth relies on price increases as memory costs rise and unit volumes fall.
- A one-time tariff refund of $34 million aided gross margin expansion.
High margins scale while appliances recover
Best Buy is no longer only a store story. The company is adding profit streams that do not depend as much on selling its own inventory. Best Buy Marketplace lets outside sellers list products on Best Buy's site. Best Buy Ads sells ad space to brands that want to reach shoppers near the point of purchase.
The latest quarter gave the bull case strong proof. Consolidated comparable sales grew 4.1% in Q2 FY27. Computing saw its tenth consecutive quarter of positive comps, and home theater hit its highest sales growth since Q2 FY22. The most promising shift is in major appliances, which stabilized and delivered slight sales growth after prior steep declines.
The bear case is now focused on unit volume, pricing, and margin quality. Best Buy relies on price increases to drive computing sales, as unit volumes are declining due to memory cost inflation. Furthermore, recent gross margin expansion was partially aided by a $34 million one-time tariff refund, which masks some of the underlying margin pressure from promotional investments.
The core tension is whether the new Marketplace and sustained tech cycle momentum can outrun margin headwinds in the core retail business. The company is also preparing for execution under Jason Bonfig's leadership starting in November.
Stores, services, and seller fees
Best Buy makes most of its money by selling consumer electronics through stores, websites, apps, and services tied to those products. Its Domestic segment includes the U.S. business and Best Buy Health. Its International segment is Canada.
The main retail model is simple. Best Buy buys products from vendors, sells them to customers, and earns the spread after product costs, labor, rent, shipping, and other expenses. That model works well during strong upgrade cycles for computers, phones, gaming, and TVs. It gets harder when shoppers pull back or when promotions rise.
The newer model aims for higher margin revenue. Services now include advertising, credit card revenue, digital content, fulfillment, health services, installation, marketplace commissions, memberships, repair, tech support, and warranty related services. Marketplace and Ads matter because they add revenue without Best Buy carrying as much inventory risk.
Marketplace is currently scaling fast, with the company expecting $1.3 billion in gross merchandise value this year. But earlier efforts like Best Buy Health have faced setbacks and material impairment due to pressures in Medicare Advantage, showing that building new profit streams outside core retail is difficult.
What Best Buy sells
Computing and Mobile Phones
This includes laptops, desktops, tablets, phones, and wearables. This category is seeing growth driven by replacement cycles and new AI enabled products, though growth is currently fueled by higher prices rather than higher volume.
Consumer Electronics
This includes TVs, soundbars, smart home, audio, and digital imaging. Home theater saw its highest sales growth in years during Q2 FY27.
Emerging Categories
Fast growing new segments include AI glasses, trading cards, and health rings. Sales for this group more than doubled in Q2 FY27 compared to last year.
Appliances
This includes large appliances such as refrigerators and ovens, plus small appliances. It matters for margins and showed signs of stabilization with slight sales growth in Q2 FY27 after prior declines.
Entertainment
This includes gaming consoles and software, drones, toys, and virtual reality.
Services
This includes ads, credit card revenue, digital content, marketplace commissions, memberships, and tech support. Best Buy Ads is tracking toward 10% growth on top of $900 million last year.
Mostly U.S. retail
Segment shares use Q2 FY27 revenue from the Form 10-Q for the three months ended August 1, 2026. Domestic is the clear center of the business, so U.S. consumer demand drives most results.
What could go wrong
Rising computing prices hurt unit volume
High impact · High oddsThe company is dealing with industry-wide memory cost increases. This is driving average selling prices up materially while unit volumes fall by high single digits. If the consumer rejects higher prices, computing sales could stall.
One-time refunds mask margin pressure
Medium impact · High oddsRecent gross margin expansion was aided by a $34 million one-time tariff refund in Q2, with another $41 million expected in Q3. This one-time benefit partially hides the underlying product margin pressure from heavy promotional investments.
Promotions eat product margins
High impact · Medium oddsManagement confirms that promotions are wider and deeper than last year. This requires a persistent promotional stance that pressures product margins, especially if higher margin streams slow down.
Marketplace and Ads stay too small
High impact · Medium oddsMarketplace and Ads are central to the bull case because they can add higher margin profit streams. While the marketplace outlook was raised to $1.3 billion GMV, the open question is whether these lines can add enough operating income to offset core retail pressure.
AI shopping changes customer behavior
Medium impact · Medium oddsBest Buy names AI driven search and AI shopping bots as a risk. If shoppers rely more on bots that compare prices instantly, Best Buy may lose traffic or need sharper prices. That could hurt store visits and online conversion.
In one breath
Is Best Buy growing again?
Yes. Consolidated comparable sales grew 4.1% in Q2 FY27, helped by computing, home theater, and a recovery in major appliances.
Why does Best Buy Marketplace matter?
Marketplace lets outside sellers offer products through Best Buy's online platform. It expands selection and creates commission revenue, which is often more profitable than first-party product sales. The company expects $1.3 billion in GMV this year.
What is the biggest risk for Best Buy right now?
The biggest risk is consumer response to higher prices. Computing growth is currently driven by price increases while unit volume declines, and promotions are needed to drive traffic elsewhere.
Sources and research notes
This page combines Finn's company research with public filings and other cited materials. The thesis is reviewed when material company information changes; Finn Scores use the latest available scoring data.
- Thesis reviewed
- September 13, 2026
- Score data
- September 27, 2026
- Reviewed by
- Shivam Bharuka
Comparable Specialty Retail companies
Companies near Best Buy Co., Inc. in Finn's Specialty Retail industry ranking.
