Best Buy ended six months with $6.3 billion of inventory, up 8.3% from a year earlier. Sales grew 3.6% to $9.8 billion. The retailer is carrying more merchandise relative to the business moving through its registers, even as the income statement looks much healthier.
Operating income rose 67.7% to $421 million, and net income climbed 69.4% to $315 million. Gross margin widened by 0.7 percentage points to 23.9%, while operating margin reached 4.3% from 2.7% a year earlier.
The strongest cash number came from operations: $1.3 billion, up from $783 million. Best Buy ended the period with $2.3 billion in cash, compared with $1.5 billion a year earlier. The company attributed the operating-cash improvement partly to the timing and volume of inventory purchases and tax payments, which makes the cash surge real but not entirely a clean read on underlying demand.
Management also points to last year's restructuring as part of the profit rebound. The comparison includes charges tied to the exit of a component of Best Buy Health, while this year's results carry less of that burden.
"Operating income rate increased in the second quarter and first six months of fiscal 2027, primarily due to lower restructuring charges and favorable gross profit rates."
Best Buy, 10-Q, September 4, 2026
That is a meaningful explanation for the margin expansion. It says less about how much additional profit the stores and websites can produce once the easier comparison disappears.
The sales growth itself is concentrated in the domestic business. Domestic revenue rose 4.3% to $9.1 billion, while international revenue fell 4.2% to $709 million. Best Buy said international gaming sales declined, partly offset by growth in mobile phones, and that foreign exchange also hurt the comparison.
"International segment adjusted SG&A increased in the first six months of fiscal 2027, primarily due to higher depreciation and advertising expense, as well as the unfavorable impact of foreign exchange rates."
Best Buy, 10-Q, September 4, 2026
The international business therefore had both weaker sales and higher adjusted selling, general and administrative costs. Domestically, Best Buy also reported higher employee compensation, marketplace and advertising expenses, and credit-card processing fees. The gross-margin improvement arrived alongside a cost base that is still moving in several directions.
The company's annual history gives the current rebound some scale. Revenue was $51.8B in fiscal 2022 before falling to $41.5B in fiscal 2025, then edging up to $41.7B in fiscal 2026. The latest six-month figures show a sharper operating recovery than the sales line, but they do not yet restore the longer-term revenue peak.
At the latest close, Best Buy traded at 17.3 times earnings, with a 5.8% earnings yield. That valuation leaves the filing's central question in plain view: how much of the earnings improvement comes from a better retail engine, and how much comes from easier restructuring comparisons and cash-flow timing?
Best Buy's next report will provide the cleanest comparison for whether inventory growth has moved back toward sales growth and whether operating margin holds after the restructuring benefit fades.
The business is earning much more, while also holding materially more inventory.