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Best Buy (BBY) delivered a solid performance in 2Q26, surpassing analyst expectations for EPS, revenue, and comparable sales in a macroeconomic environment that continues to pressure discretionary retailers with elevated interest rates, uneven consumer confidence, and tariff-induced cost volatility. CEO Corie Barry highlighted the +1.6% enterprise comparable sales growth as the strongest in three years, attributing it to strategic merchandising around innovation cycles and value-oriented promotions that resonated with budget-conscious shoppers.

Yet, despite this upside, the company opted to reaffirm rather than raise its FY26 guidance -- EPS of $6.15-$6.30, revenue of $41.1-$41.9 billion, and comparable sales of -1.0% to +1.0% -- a decision that disappointed investors anticipating a more optimistic revision and triggered a sharp selloff in the stock.

• The conservative FY26 outlook stems primarily from escalating tariff pressures, which are anticipated to weigh on both consumer spending power and BBY's cost structure, exacerbating the already cautious backdrop of subdued big-ticket purchases and delayed home-related expenditures.
• On the business side, tariffs could inflate COGS for imported electronics and appliances, with retaliatory measures from trading partners like China further complicating supply chains. That said, Barry noted the company is currently trending toward the higher end of its sales range, buoyed by early back-to-school momentum and Q2's outperformance, suggesting underlying demand resilience if macro conditions stabilize.
• BBY has proactively mitigated exposure by collaborating with vendors to diversify manufacturing away from China, reducing the share of product costs tied to Chinese imports from approximately 55% in March 2025 to 30-35% today; this shift incorporates more sourcing from tariff-exempt regions like the U.S. and Mexico and lower-duty alternatives such as Vietnam, India, South Korea, and Taiwan, alongside strategies like accelerated shipments, supplier cost absorption, and selective price adjustments implemented as a last resort by mid-May.
• Enterprise comparable sales marked a meaningful inflection point in Q2, flipping to positive territory with a 1.6% gain after Q1's -0.7% decline, signaling early signs of stabilization in the consumer electronics cycle as replacement demand for aging tech picks up amid innovation launches. This improvement was notably influenced by modest price increases across select categories to offset tariff-related costs, which helped bolster the topline without materially deterring volume in high-demand areas, though elasticity remains a monitored risk heading into holiday seasonality.
• Strength was evident in several key segments: gaming posted robust growth, fueled by the Nintendo (NTDOY) Switch 2 launch in early June, which drove preorders, midnight store openings, and ancillary sales in handheld devices and augmented reality glasses; computing achieved another quarter of expansion that spanned across broad price points and upgrade cycles; and mobile phones delivered comparable sales growth for the first time in three years. Conversely, softness persisted in appliances, where high interest rates continue to suppress home improvement spending, and home theater, impacted by lapping prior-year strength and tariff-driven pricing hesitancy.

BBY's Q2 performance stands out as a testament to operational resilience, with the strongest comparable sales growth in three years highlighting the company's ability to capitalize on innovation-driven demand in categories like gaming and computing amid a tough retail climate. However, the reaffirmation of cautious FY26 guidance -- despite positive trends -- effectively tempers enthusiasm, as tariff uncertainties and potential consumer pullback overshadow the quarter's achievements.