Financial Analysis

Contingencies and Commitments We are involved in a number of legal proceedings. Where appropriate, we have made accruals with respect to these matters, which are reflected on our Consolidated Financial Statements. However, there are cases where liability is not probable or the amount cannot be reasonably estimated and, therefore, accruals have not been made. We provide disclosure of matters where we believe it is reasonably possible the impact may be material to our Consolidated Financial Statements. We had outstanding letters of credit totaling $76 million as of January 31, 2026.

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Debt Short-Term Debt U.S. Revolving Credit Facility On April 18, 2025, we entered into a $1.25 billion five-year senior unsecured revolving credit facility agreement (the Five-Year Facility Agreement) with a syndicate of banks. The Five-Year Facility Agreement replaced the previous $1.25 billion senior unsecured revolving credit facility (the Previous Facility) with a syndicate of banks, which was entered into April 2023 and scheduled to expire April 2028, but was terminated on April 18, 2025. The Five-Year Facility Agreement permits borrowings of up to $1.25 billion and expires in April 2030. There were no borrowings outstanding under the Five-Year Facility Agreement as of January 31, 2026, or the Previous Facility as of February 1, 2025. The interest rate under the Five-Year Facility Agreement is variable and is determined at our option as: (i) the sum of (a) the greatest of (1) U.S. Bank National Associations prime rate, (2) the greater of the federal funds effective rate and the overnight bank funding rate plus, in each case, 0.5%, and (3) Adjusted Term Secured Overnight Financing Rate (the Adjusted Term SOFR) for an interest period of one month plus 1%, and (b) a variable margin rate (the ABR Margin); or (ii) Adjusted Term SOFR for the applicable interest period plus a variable margin rate (the Term SOFR Margin). In addition, a facility fee is assessed on the commitment amount. The ABR Margin, Term SOFR Margin and the facility fee are based upon our current senior unsecu …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

Fair Value Measurements Fair value measurements are reported in one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data). Recurring Fair Value Measurements Financial assets and liabilities accounted for at fair value were as follows ($ in millions): Balance Sheet Location (1) Fair Value Hierarchy Fair Value at Assets January 31, 2026 February 1, 2025 Money market funds (2) Cash and cash equivalents Level 1 $ 143 $ 439 Time deposits (3) Cash and cash equivalents Level 2 252 150 Commercial paper (2) Cash and cash equivalents Level 2 37 - Money market funds (2) Other current assets Level 1 123 140 Time deposits (3) Other current assets Level 2 30 50 Marketable securities that fund deferred compensation (4) Other assets Level 1 41 39 Liabilities Interest rate swap derivative instruments (5) Long-term liabilities Level 2 1 14 (1) Balance sheet location is determined by the length to maturity at date of purchase and whether the assets are restricted for particular use. (2) Valued at quoted market prices in active markets at period end. (3) Valued at face value plus accrued interest at period end, which approximates fair value. (4) Valued using the performance of mutual funds that trade with sufficient frequency and volume to obtain pricing inform …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Goodwill and Intangible Assets Goodwill Goodwill balances by segment were as follows ($ in millions): January 31, 2026 February 1, 2025 Gross Carrying Amount Cumulative Impairment Gross Carrying Amount Cumulative Impairment Domestic $ 1,450 $ (660) $ 1,450 $ (542) International 608 (608) 608 (608) Total $ 2,058 $ (1,268) $ 2,058 $ (1,150) In the third quarter of fiscal 2026, we recorded a goodwill impairment of $118 million within the Domestic segment for the Best Buy Health reporting unit. The carrying value of the Best Buy Health reporting unit as of January 31, 2026, was $298 million. A change in Best Buy Healths customer base during the third quarter of fiscal 2026 resulted in an impairment review of all Best Buy Health assets. The fair value of Best Buy Health was estimated primarily based on DCF analysis. The impairment reflects downward revisions of our revenue growth rates and margin rates compared to previous projections, in part due to pressures in the Medicaid and Medicare Advantage markets. In addition, definite-lived intangible asset impairments and long-lived asset impairments were also recorded. Refer to Note 4, Fair Value Measurements , for additional information. No further impairments were identified in the fourth quarter of fiscal 2026. Indefinite-Lived Intangible Assets In the second quarter of fiscal 2026, we recorded a full impairment of $16 million related to our only remaining indefinite-lived intangible asset as a result of restructuring activity that …

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"Income Taxes Reconciliation of the federal statutory income tax rate to the effective tax rate was as follows ($ in millions): 2026 Amount Percent U.S. federal income tax at the statutory rate $ 295 21.0 % State and local income taxes, net of federal income tax effect (1) 38 2.7 % Foreign tax effects: China - Statutory tax rate differential (20) (1.4) % Other foreign jurisdictions 8 0.6 % Effect of cross-border tax laws, net of related foreign tax credits: Subpart F inclusion 19 1.3 % Other (1) (0.1) % Nontaxable or nondeductible items: Goodwill impairment 25 1.8 % Other 11 0.8 % Other adjustments: Exit of a component of Best Buy Health business (27) (1.9) % Other (11) (0.8) % Effective income tax rate $ 337 24.0 % (1) State and local income taxes in California, Oregon, Texas, New York and Illinois contributed to the majority (greater than 50%) of the tax effect in this category. Reconciliations of prior year federal statutory income tax rate to the effective tax rate were as follows ($ in millions): 2025 2024 Federal income tax at the statutory rate $ 272 $ 340 State income taxes, net of federal benefit 52 57 Change in unrecognized tax benefits (5) (6) Expense (benefit) from foreign operations 3 (5) Tax credits (23) (13) Goodwill impairments (non-deductible) 63 - Other 10 8 Income tax expense $ 372 $ 381 Effective income tax rate 28.7 % 23.5 % Earnings before income tax expense and equity in income of affiliates by jurisdiction were as follows ($ in millions): 2026 2025 202 …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Leases Supplemental balance sheet information related to our leases was as follows ($ in millions): Balance Sheet Location January 31, 2026 February 1, 2025 Assets Operating leases Operating lease assets $ 2,869 $ 2,833 Finance leases Property under finance leases, net (1) 42 34 Total lease assets $ 2,911 $ 2,867 Liabilities Current: Operating leases Current portion of operating lease liabilities $ 623 $ 617 Finance leases Current portion of long-term debt 11 10 Non-current: Operating leases Long-term operating lease liabilities 2,334 2,282 Finance leases Long-term debt 21 15 Total lease liabilities $ 2,989 $ 2,924 (1) Finance leases were recorded net of accumulated depreciation of $38 million and $54 million as of January 31, 2026, and February 1, 2025, respectively. Costs and cash flow impacts associated with our finance leases were immaterial in the periods presented. Components of our total operating lease cost were as follows ($ in millions): Statement of Earnings Location 2026 2025 2024 Operating lease cost (1) Cost of sales and SG&A (2) $ 790 $ 784 $ 777 Variable lease cost Cost of sales and SG&A (2) 241 236 239 Sublease income SG&A (14) (13) (11) Total operating lease cost $ 1,017 $ 1,007 $ 1,005 (1) Includes short-term leases, which are immaterial. (2) Supply chain-related amounts are included in Cost of sales. Other information related to our operating leases was as follows ($ in millions): 2026 2025 Cash paid for amounts included in the measurement of l …

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"Adopted Accounting Pronouncements In the fourth quarter of fiscal 2026, we prospectively adopted Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, issued by the Financial Accounting Standards Board (""FASB""). ASU 2023-09 requires annual disclosure of specific categories meeting a quantitative threshold within the income tax rate reconciliation, as well as disaggregation of income taxes paid by jurisdiction. Refer to Note 10, Income Taxes, for applicable new disclosures. Unadopted Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03, Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , which requires disclosure of specific expense categories in the notes to financial statements. The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. We are currently evaluating the impact of the ASU and expect to include updated expense disclosures in our fiscal 2028 Form 10-K."

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Restructuring Restructuring charges were as follows ($ in millions): 2026 2025 2024 Fiscal 2026 Labor and Store Optimization Initiative $ 117 $ - $ - Best Buy Health Optimization and China Sourcing Initiative 101 - - Fiscal 2024 Restructuring Initiative (28) 3 171 Fiscal 2023 Resource Optimization Initiative - (6) (18) Total $ 190 $ (3) $ 153 Fiscal 2026 Labor and Store Optimization Initiative In the second quarter of fiscal 2026, we commenced a restructuring initiative intended to align field resources with changing customer behaviors, close select non-traditional store locations and redirect corporate resources for better alignment with our strategy. We currently do not expect to incur material future restructuring charges related to this initiative. All charges incurred related to this initiative were from continuing operations and presented within Restructuring charges on our Consolidated Statements of Earnings. The composition of restructuring charges incurred related to this initiative were as follows ($ in millions): 2026 Domestic International Total Termination benefits $ 68 $ 3 $ 71 Asset impairments and other costs (1) 46 - 46 Total $ 114 $ 3 $ 117 (1) Primarily represents asset impairments related to planned store closures, an impairment related to an indefinite-lived tradename and other exit costs. See Note 3, Goodwill and Intangible Assets , for additional information. The remaining carrying value of net assets approximates fair value and was immaterial as of Jan …

RestructuringAndRelatedActivitiesDisclosureTextBlock · excerpt; the full note is in the filing

Revenue We generate most of our revenue from contracts with customers from the sale of products and services. Contract balances primarily relate to unfulfilled membership benefits and services not yet completed, product merchandise not yet delivered to customers, unredeemed gift cards and deferred revenue from our private label and co-branded credit card arrangement. Contract balances were as follows ($ in millions): January 31, 2026 February 1, 2025 Receivables, net (1) $ 538 $ 504 Short-term contract liabilities included in: Unredeemed gift card liabilities 235 253 Deferred revenue 900 951 Accrued liabilities 57 50 Long-term contract liabilities included in: Long-term liabilities 205 229 (1) Receivables are recorded net of allowances for expected credit losses of $17 million and $20 million as of January 31, 2026, and February 1, 2025, respectively. During fiscal 2026 and fiscal 2025, $1.1 billion and $1.1 billion of revenue was recognized, respectively, that was included in contract liabilities at the beginning of the respective periods. Estimated revenue from our contract liability balances expected to be recognized in future periods if the performance of the contract is expected to have an initial duration of more than one year is as follows ($ in millions): Fiscal Year Amount Fiscal 2027 $ 36 Fiscal 2028 33 Fiscal 2029 28 Fiscal 2030 28 Fiscal 2031 27 Thereafter 89 See Note 13, Segment and Geographic Information , for information on our revenue by segment and category.

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Segment and Geographic Information Revenue information by segment and category was as follows ($ in millions): 2026 2025 2024 Domestic: Computing and Mobile Phones $ 18,038 $ 17,103 $ 16,930 Consumer Electronics 10,527 11,148 12,014 Appliances 4,166 4,589 5,469 Entertainment 2,811 2,641 3,063 Services 2,466 2,456 2,357 Other 270 301 264 Total Domestic revenue 38,278 38,238 40,097 International: Computing and Mobile Phones 1,676 1,578 1,552 Consumer Electronics 933 917 955 Appliances 303 321 335 Entertainment 281 267 300 Services 190 175 173 Other 30 32 40 Total International revenue 3,413 3,290 3,355 Total revenue $ 41,691 $ 41,528 $ 43,452 Adjusted operating income by segment and the reconciliation to consolidated earnings before income tax expense and equity in income of affiliates were as follows ($ in millions): 2026 Domestic (1) International Total Revenue $ 38,278 $ 3,413 $ 41,691 Cost of sales 29,642 2,676 32,318 Adjusted SG&A (2) 6,966 622 7,588 Adjusted operating income $ 1,670 $ 115 1,785 Restructuring charges 190 Goodwill and intangible asset impairments 171 Intangible asset amortization 14 Long-lived asset impairment 21 Operating income 1,389 Other income (expense): Loss on disposal of subsidiaries (6) Investment income and other 68 Interest expense (47) Earnings before income tax expense and equity in income of affiliates $ 1,404 (1) Domestic segment Adjusted operating income includes certain operations that are based in foreign tax jurisdictions and primaril …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

"Shareholders Equity Stock Compensation Plans The Best Buy Co., Inc. 2020 Omnibus Incentive Plan (the 2020 Plan) authorizes us to grant or issue non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and other equity awards to our employees, officers, advisers, consultants and directors. In addition, shares subject to any outstanding awards under our prior stock incentive plans that are forfeited, cancelled or reacquired by the company are available for issuance under the 2020 Plan. Awards issued under the 2020 Plan vest as determined by the Compensation and Human Resources Committee of our Board of Directors (Board) at the time of grant. Dividend equivalents accrue on restricted stock and restricted stock units during the vesting period, are forfeitable prior to the vesting date and are settled in shares of our common stock at the vesting or distribution date. As of January 31, 2026, a total of 17.6 million shares were available for future grants under the 2020 Plan. We have not granted incentive stock options. Stock-based compensation expense was as follows ($ in millions): 2026 2025 2024 Share awards Time-based $ 119 $ 122 $ 126 Market-based 16 17 19 Performance-based 4 - - Stock-based compensation expense 139 139 145 Income tax benefits 26 25 27 Stock-based compensation expense, net of tax $ 113 $ 114 $ 118 Time-Based Share Awards Time-based share awards vest solely upon continued employment, generally 33% …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

Subsequent Events During fiscal 2026, U.S. tariffs were imposed under the International Emergency Economic Powers Act (the IEEPA) that applied to certain imported private-label branded and direct import products that we sold during the year or held in inventory as of the end of the fiscal year. On February 20, 2026, the U.S. Supreme Court ruled that tariffs imposed under the IEEPA were unauthorized. The ruling did not address potential refunds. Following the ruling, various actions and proceedings have occurred involving U.S. trade authorities and the U.S. Court of International Trade relating to the administration, collection and potential refund of tariffs imposed under the IEEPA. The outcome of these actions, including the timing, process and ultimate recoverability of any refunds, remains uncertain. …

SubsequentEventsTextBlock · excerpt; the full note is in the filing

Contingencies We are involved in a number of legal proceedings. Where appropriate, we have made accruals with respect to these matters, which are reflected on our Condensed Consolidated Financial Statements. However, there are cases where liability is not probable or the amount cannot be reasonably estimated and, therefore, accruals have not been made. We provide disclosure of matters where we believe it is reasonably possible the impact may be material to our Condensed Consolidated Financial Statements.

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"Debt Short-Term Debt U.S. Revolving Credit Facility We have a $1.25 billion five-year senior unsecured revolving credit facility agreement (the Five-Year Facility Agreement) with a syndicate of banks that expires in April 2030. There were no borrowings outstanding under the Five-Year Facility Agreement as of May 2, 2026, January 31, 2026, or May 3, 2025. Long-Term Debt Long-term debt consisted of the following ($ in millions): May 2, 2026 January 31, 2026 May 3, 2025 Notes, 4.45%, due October 1, 2028 (""2028 Notes"") $ 500 $ 500 $ 500 Notes, 1.95%, due October 1, 2030 (""2030 Notes"") 650 650 650 Interest rate swap valuation adjustments (8) (1) (8) Subtotal 1,142 1,149 1,142 Debt discounts and issuance costs (5) (5) (6) Finance lease obligations 32 32 27 Total long-term debt 1,169 1,176 1,163 Less current portion 11 11 10 Total long-term debt, less current portion $ 1,158 $ 1,165 $ 1,153 Fair Value and Future Maturities See Note 4, Fair Value Measurements , for the fair value of long-term debt. The 2028 Notes mature in fiscal 2029 and the 2030 Notes mature in fiscal 2031."

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Fair Value Measurements Recurring Fair Value Measurements Financial assets and liabilities accounted for at fair value were as follows ($ in millions): Fair Value as of Balance Sheet Location (1) Fair Value Hierarchy May 2, 2026 January 31, 2026 May 3, 2025 Assets Money market funds (2) Cash and cash equivalents Level 1 $ 77 $ 143 $ 79 Time deposits (3) Cash and cash equivalents Level 2 200 252 232 Commercial paper (2) Cash and cash equivalents Level 2 - 37 - Money market funds (2) Other current assets Level 1 124 123 142 Time deposits (3) Other current assets Level 2 30 30 50 Marketable securities that fund deferred compensation (4) Other assets Level 1 41 41 38 Liabilities Interest rate swap derivative instruments (5) Long-term liabilities Level 2 8 1 8 (1) Balance sheet location is determined by the length to maturity at date of purchase and whether the assets are restricted for particular use. (2) Valued at quoted market prices in active markets at period end. (3) Valued at face value plus accrued interest at period end, which approximates fair value. (4) Valued using the performance of mutual funds that trade with sufficient frequency and volume to obtain pricing information on an ongoing basis. (5) Valued using readily observable market inputs. These instruments are custom, over-the-counter contracts with various bank counterparties that are not traded on an active market. See Note 5, Derivative Instruments , for additional information. Nonrecurring Fair Value Measureme …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Goodwill Goodwill balances by segment were as follows ($ in millions): May 2, 2026 January 31, 2026 May 3, 2025 Gross Carrying Amount Cumulative Impairment Gross Carrying Amount Cumulative Impairment (1) Gross Carrying Amount Cumulative Impairment Domestic $ 1,450 $ (660) $ 1,450 $ (660) $ 1,450 $ (542) International 608 (608) 608 (608) 608 (608) Total $ 2,058 $ (1,268) $ 2,058 $ (1,268) $ 2,058 $ (1,150) (1) In the third quarter of fiscal 2026, we recorded a goodwill impairment of $118 million within the Domestic segment for the Best Buy Health reporting unit.

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"Unadopted Accounting Pronouncements In November 2024, the Financial Accounting Standards Board (""FASB"") issued Accounting Standards Update (""ASU"") 2024-03, Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , which requires disclosure of specific expense categories in the notes to financial statements. The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. We are currently evaluating the impact of the ASU and expect to include updated expense disclosures in our fiscal 2028 Form 10-K."

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Restructuring Restructuring charges were as follows ($ in millions): Three Months Ended May 2, 2026 May 3, 2025 Fiscal 2026 Labor and Store Optimization Initiative $ (8) $ - Best Buy Health Optimization and China Sourcing Initiative (1) 111 Fiscal 2024 Restructuring Initiative - (2) Total $ (9) $ 109 Fiscal 2026 Labor and Store Optimization Initiative In the second quarter of fiscal 2026, we commenced a restructuring initiative intended to align field resources with changing customer behaviors, close select non-traditional store locations and redirect corporate resources for better alignment with our strategy. We currently do not expect to incur material future restructuring charges related to this initiative. All charges incurred related to this initiative were from continuing operations and presented within Restructuring charges on our Condensed Consolidated Statements of Earnings. The composition of restructuring charges incurred related to this initiative were as follows ($ in millions): Three Months Ended May 2, 2026 Cumulative Amount as of May 2, 2026 Domestic Domestic International Total Termination benefits $ (7) $ 61 $ 3 $ 64 Asset impairments and other costs (1) (1) 45 - 45 Total $ (8) $ 106 $ 3 $ 109 (1) Cumulative amount as of May 2, 2026 primarily represents asset impairments related to planned store closures, an impairment related to an indefinite-lived tradename and other exit costs. The remaining carrying value of net assets approximates fair value and was imm …

RestructuringAndRelatedActivitiesDisclosureTextBlock · excerpt; the full note is in the filing

Revenue We generate most of our revenue from contracts with customers from the sale of products and services. Contract balances primarily relate to unfulfilled membership benefits and services not yet completed, product merchandise not yet delivered to customers, unredeemed gift cards and deferred revenue from our private label and co-branded credit card arrangement. Contract balances were as follows ($ in millions): May 2, 2026 January 31, 2026 May 3, 2025 Receivables, net (1) $ 528 $ 538 $ 461 Short-term contract liabilities included in: Unredeemed gift card liabilities 229 235 246 Deferred revenue 843 900 891 Accrued liabilities 64 57 59 Long-term contract liabilities included in: Long-term liabilities 197 205 221 (1) Receivables are recorded net of allowances for expected credit losses of $13 million, $17 million and $15 million as of May 2, 2026, January 31, 2026, and May 3, 2025, respectively. During the first three months of fiscal 2027 and fiscal 2026, $569 million and $614 million of revenue was recognized, respectively, that was included in the contract liabilities at the beginning of the respective periods. Estimated revenue from our contract liability balances expected to be recognized in future periods if the performance of the contract is expected to have an initial duration of more than one year is as follows ($ in millions): Fiscal Year Amount Remainder of fiscal 2027 $ 27 Fiscal 2028 33 Fiscal 2029 29 Fiscal 2030 28 Fiscal 2031 27 Fiscal 2032 26 Thereafter 63 …

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Segments Revenue Category Reclassification Beginning in the first quarter of fiscal 2027, we reclassified certain amounts within our revenue categories to better align with management's current view of the business. The reclassification primarily relates to credit card revenue and digital content revenue (including digital gaming, software and subscriptions) that were previously included in various product revenue categories and, following the reclassification, are now included within services revenue. The reclassification impacts only the presentation of revenue by category and does not affect previously reported total revenue, net earnings or cash flows. The key components of each revenue category are now as follows: Computing and Mobile Phones - computing (including desktops, notebooks and peripherals), mobile phones (including related mobile network carrier commissions), networking, tablets (including e-readers) and wearables (including smartwatches); Consumer Electronics - digital imaging, health and fitness products, home theater (including accessories, soundbars and televisions), portable audio (including headphones and portable speakers) and smart home; Appliances - large appliances (including dishwashers, laundry, ovens and refrigerators) and small appliances (including blenders, coffee makers, vacuums and personal care); Entertainment - drones, gaming (including hardware, peripherals and certain software, as well as augmented reality glasses), toys and virtual reali …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

Repurchase of Common Stock On February 28, 2022, our Board of Directors approved a $5.0 billion share repurchase program. The program had $3.0 billion remaining available for repurchases as of May 2, 2026. There is no expiration date governing the period over which we can repurchase shares under this authorization. There were no share repurchases during the three months ended May 2, 2026. Information regarding the shares we repurchased and retired in the prior year was as follows ($ and shares in millions, except per share amounts): Three Months Ended May 3, 2025 Total cost of shares repurchased $ 100 Average price per share $ 64.39 Number of shares repurchased and retired 1.6

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