Executive Summary

Q3 FY25 revenue was $9.45B and GAAP diluted EPS was $1.26; comparable sales declined 2.9% as demand in September–October was softer than expected due to macro uncertainty, deal-timing, and election distraction, while gross margin expanded 60 bps YoY on stronger services/memberships .
Management cut FY25 revenue guidance to $41.1–$41.5B and comp sales to -2.5% to -3.5% but maintained non-GAAP operating income rate (4.1%–4.2%); Q4 comps guided flat to -3% and non-GAAP OI rate to 4.6%–4.8% .
Versus external consensus from LSEG (non-SPGI), BBY modestly missed on revenue ($9.45B vs $9.63B) and adjusted EPS ($1.26 vs $1.29); shares fell ~5% on the day, with guidance reduction a key catalyst .
Domestic categories mixed: computing/tablets grew (laptops +7%) while appliances, home theater and gaming declined; domestic online revenue was $2.73B and 31.4% of domestic sales .

What Went Well and What Went Wrong

What Went Well

Gross margin expanded to 23.5% (+60 bps YoY), driven by improved services/membership profitability; non-GAAP OI rate was in line despite softer sales .
Computing and tablets posted +5.2% comps with laptops +7%, supported by merchandising, exclusives in AI-capable premium Windows SKUs, and strengthened store/digital experiences .
Omnichannel execution: $2.7B online sales (31% of domestic revenue), ~45% of digital sales picked up in-store with rapid availability, enhancing fulfillment and customer experience .

Management quote: “In the third quarter, our teams delivered an in-line non-GAAP operating income rate on sales that were a little softer than expected…we have seen customer demand increase again [early Q4].” — Corie Barry, CEO .

What Went Wrong

Top-line softness: enterprise comps -2.9% and domestic comps -2.8%; September/October demand troughs deeper than forecast amid macro uncertainty, deal-waiting, and election distraction .
Category pressure: Appliances (-14.7% comps), consumer electronics (-5.8%), entertainment (-18.8%); promotional intensity needed to stimulate demand compressed product margins, partly offset by services .
Guidance reduction: FY25 revenue and comp guidance lowered; tax rate trimmed; non-GAAP EPS range narrowed, signaling tempered expectations for the holiday quarter .

Financial Results

Headline Results vs Prior Quarters (Enterprise)

Metric	Q1 FY25 (oldest)	Q2 FY25	Q3 FY25 (newest)
Revenue ($USD Billions)	$8.847	$9.288	$9.445
GAAP Diluted EPS ($)	$1.13	$1.34	$1.26
Non-GAAP Diluted EPS ($)	$1.20	$1.34	$1.26
Gross Margin %	23.3%	23.5%	23.5%
SG&A % of Revenue	19.6%	19.5%	19.8%
Operating Income %	3.5%	4.1%	3.7%

YoY Comparison (Q3 FY25 vs Q3 FY24)

Metric	Q3 FY24 (older)	Q3 FY25 (newer)
Revenue ($USD Billions)	$9.756	$9.445
GAAP Diluted EPS ($)	$1.21	$1.26
Non-GAAP Diluted EPS ($)	$1.29	$1.26
Gross Margin %	22.9%	23.5%
SG&A % of Revenue	19.2%	19.8%
Operating Income %	3.6%	3.7%

Segment Breakdown (Q3 FY25)

Segment	Revenue ($USD Millions)	Gross Profit %	SG&A %	Operating Income %
Domestic	$8,697	23.6%	19.7%	3.9%
International	$748	22.5%	20.7%	1.7%

KPIs and Mix (Q3 FY25)

KPI	Q3 FY25
Enterprise comparable sales change (%)	-2.9%
Domestic comparable sales change (%)	-2.8%
Domestic comparable online sales change (%)	-1.0%
Domestic online revenue ($USD Billions)	$2.73
Online as % of Domestic revenue	31.4%
Digital sales picked up in-store (%)	~45%
Category mix (Domestic): Computing & Mobile 47%; CE 28%; Appliances 12%; Entertainment 5%; Services 7%; Other 1%
Category comps (Domestic): Computing & Mobile +3.8%; CE -5.8%; Appliances -14.7%; Entertainment -18.8%; Services +6.0%; Other +12.9%
Laptops comp growth (Domestic)	+7%
Computing & Tablets comp growth (Domestic)	+5.2%

Note on non-GAAP: Q3 FY25 non-GAAP diluted EPS equals GAAP due to minimal net adjustments (intangible amortization and restructuring nearly offset) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Billions)	FY25	$41.3–$41.9	$41.1–$41.5	Lowered
Comparable Sales (%)	FY25	-3.0 to -1.5	-3.5 to -2.5	Lowered
Non-GAAP Operating Income Rate (%)	FY25	4.1–4.2	4.1–4.2	Maintained
Non-GAAP Effective Tax Rate (%)	FY25	~24.0	~23.5	Lowered
Non-GAAP Diluted EPS ($)	FY25	$6.10–$6.35	$6.10–$6.25	Narrowed (lower high end)
Capital Expenditures ($USD Millions)	FY25	~750	~750	Maintained
Comparable Sales (%)	Q4 FY25	N/A	Flat to -3%	New
Non-GAAP Operating Income Rate (%)	Q4 FY25	N/A	4.6–4.8	New
Dividend per share ($)	Next payable	$0.94 (announced)	$0.94 (Jan 7, 2025)	Maintained

Earnings Call Themes & Trends

Topic	Q1 FY25 (older)	Q2 FY25	Q3 FY25 (newer)	Trend
AI/tech initiatives (PCs/phones)	Emphasis on AI and digital support; Google Cloud/Accenture partnership; routing/virtual assistants	Computing/tablets +6% comps; innovation driving upgrades	Premium Windows AI PCs ~50% of assortment; laptops +7%; early-stage AI phone curiosity	Improving demand in computing; AI narrative building
Promotional environment	More promotional than expected; targeted investments	Promotionality persists; SG&A favorability offset	Value-seeking high; doorbusters/early Black Friday; elasticities inconsistent	Ongoing high promo intensity
Supply chain & tariffs	Efficiency programs; AI routing; repair ops optimization	FX pressure in International; mix/ASPs shift	Tariff exposure: ~50–60% COGS from China; mitigation through assortment, sourcing, pricing	Monitoring policy risk; mitigation plans
Membership/services profitability	Driving GP rate expansion; cost to serve improvements	Services offset product margins; credit card profit sharing lower	Benefit moderating as changes are lapped; attach rates improving in warranty	Stable to moderating tailwind
Omnichannel execution	60% packages within 1 day; 40% digital pickup	Online ~32% domestic revenue	Online $2.7B; 31% mix; ~45% pickup, >90% ready in 30 minutes	Sustained strong fulfillment metrics
Store formats & labor	Dedicated expert labor rollout; vendor staffing expansion	Noted vendor funding/labor impacts	New smaller formats (Bozeman/Kansas City), outlet expansion; vendor labor in mobile	Portfolio optimization continues
International expansion	N/A	N/A	167 Best Buy Express in Canada; neutral EBIT in FY25	New revenue stream ramping

Management Commentary

“A combination of the ongoing macro uncertainty, customers waiting for deals and sales events, and distraction during the run-up to the election…led to softer-than-expected demand.” — Corie Barry, CEO .
“Our overall gross profit rate was better than expected, primarily driven by favorable product margins…SG&A dollars were slightly favorable…due to lower incentive compensation.” — Matt Bilunas, CFO .
“We kicked off our Black Friday sale a week earlier…doorbusters…enterprise comps for the first three weeks of November are up approximately 5% over last year.” — Corie Barry, CEO .
“Tariffs…we are the importer of record on only about 2%–3%…~50%–60% of our cost from China; Mexico second…costs typically shared among vendors, us, and customers.” — Corie Barry, CEO .

Q&A Highlights

Q4 outlook: Despite +5% November-to-date comps, guidance accounts for shorter holiday season, calendar shifts, and deeper valleys between sales events; high end assumes continued strength in computing/services .
Promotional strategy: Aggressive yet targeted price investments; inconsistent elasticity across periods; leveraging trade-in and digital certificates to spur demand .
Membership retention: Paid members growing; retention exceeding internal expectations for Total/Plus (no precise rates disclosed) .
Laptops/AI PCs: Laptops +7% comp; premium Windows AI PCs ~50% of assortment; replacement/upgrade cycle key driver ahead of Windows 10 EOL in Oct-2025 .
Marketplace & Best Buy Express: US marketplace targeted for mid-next year; Best Buy Express EBIT neutral in FY25, expected improvement in FY26 .

Estimates Context

S&P Global consensus data was unavailable at time of analysis due to access limits; therefore comparisons to SPGI consensus cannot be provided.
External media (LSEG via CNBC) reported expectations of $9.63B revenue and $1.29 adjusted EPS; BBY delivered $9.45B revenue and $1.26 adjusted EPS, implying modest misses on both .
Non-GAAP EPS decreased 2% YoY ($1.26 vs $1.29) as credit card profit sharing and product margins pressured results, partially offset by higher services/membership profitability .

Key Takeaways for Investors

Gross margin resilience from services/membership continues to buffer promotional/product margin pressure; expect this tailwind to moderate as program changes are fully lapped .
Near-term trading: Guidance reduction and holiday caution suggest elevated event risk; stock sensitivity to December demand valleys and tariff headlines remains high .
Category rotation: Positioning into computing/AI-capable PCs and tablets looks favorable; appliances/home theater/gaming remain under pressure—watch mix shifts and pricing strategy .
Fulfillment advantage: Rapid BOPIS and high pickup penetration support conversion and cost efficiency; continued omnichannel execution is a differentiator in a shorter holiday season .
International/Marketplace optionality: Canadian Best Buy Express adds footprint with neutral near-term EBIT; US marketplace launch could extend assortment and ad monetization in FY26 .
Capital return intact: Dividend ($0.94) maintained; ~$500M repurchase plan for FY25 supports TSR despite top-line headwinds .
Risk monitor: Tariff exposure (China/Mexico) and inconsistent promotional elasticity could impact margins/price perception; management has mitigation levers but customer price sensitivity is high .

BEST BUY CO INC (BBY)·Q3 2025 Earnings Summary