Best Buy Co., Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Best Buy's first quarter fiscal 2027 earnings call. At this time, all participants are in a listen-only mode. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. As a reminder, this call is being recorded for playback and will be available by approximately 1 p.m. Eastern time today. If you need assistance on the call at any time, please press star zero and an operator will assist you. I will now turn the conference over to Molly O'Brien, head of investor relations. Molly, please go ahead.

Thank you and good morning, everyone. Joining me on the call today are Corey Berry, our CEO, Matt Valunas, our Chief Financial and Strategy Officer, and Jason Bonfig, our Chief Customer Product and Fulfillment Officer. During the call today, we will be discussing both GAAP and non-GAAP financial measures, the reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, and an explanation of why these non-GAAP financial measures are useful. can be found in this morning's earnings release, which is available on our website, investors.bestbuy.com. Some of the statements we will make today are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may address the financial condition, business initiatives, growth plans, investments, and expected performance of the company, and are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Please refer to the company's current earnings release and our most recent Form 10-K and subsequent Form 10-Qs for more information on these risks and uncertainties. The company undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call. Before turning the call over to Corey, I want to note the revenue reclassification referenced within this morning's release. Starting this quarter, we have reclassified certain revenue among our categories. The most notable changes were credit card revenue and digital content, which includes digital gaming, software, and subscription. Previously, these items were included within our various product revenue categories, and now they are fully included within the services category. The reclassification only impacts the presentation of revenue by category and does not affect total revenue or total comparable sales as previously reported, nor does it affect our previously reported earnings or cash flow. The information and related schedules were in our 8K filing this morning and are also available on our investor relations website. And now I will turn the call over to Cori.

Good morning, everyone, and thank you for joining us. Today, we are pleased to report better than expected results for the first quarter. Our comparable sales grew 2% versus last year, higher than our outlook, with positive comps across the majority of our major product categories. We also drove operating income rate expansion and earnings per share growth. Specifically, on revenue of $8.9 billion, we delivered an adjusted operating income rate of 4.1% and adjusted diluted earnings per share of $1.28, which was up 11% versus last year. I want to give a big thank you to our employees across the company for their dedication to our customers and commitment to our strategy. We are delivering on our strategy to strengthen our position in retail as a leading omnichannel destination for technology, while at the same time scaling new profit streams that we expect to provide considerable benefit over time. Our Best Buy ads and marketplace initiatives exceeded their performance targets. We are pleased with our progress, and both delivered another quarter of positive contribution to gross profit rates. Our domestic marketplace GMB reached approximately $250 million in the first quarter. In fact, when including our marketplace GMB, our domestic sales growth for the quarter was more than 4%. From a category perspective, we delivered stronger than expected sales performance in the gaming category across the three major consoles, Switch 2, PS5, and Xbox. This gaming growth was supported by demand for popular software titles like Pokemon Pocopia. We also saw strong growth in newer and emerging categories, including AI glasses, 3D printers, collectibles like trading cards, health rings, and PC gaming handhelds. Sales for this group of categories doubled versus last year. In computing, we delivered our ninth consecutive quarter of positive comparable sales, driven by a combination of customer need to upgrade and replace and product innovation. Our Q1 computing sales were also supported by strong performance from our Best Buy business team, which grew 15% overall, and their education, corporate, and healthcare clients. In mobile phones, we delivered our fifth consecutive quarter of growth, driven by our expanded partnerships and in-store operating model improvements with large carriers. In addition, we saw better than expected customer reaction to new phone launches in the quarter. In the home theater category, we showed a material improvement in TV growth trends in the first quarter. While sales were still down slightly versus last year, we saw growth in units and market share throughout the quarter. The improved performance was across tiers and price points. We believe the momentum in Q1 is a positive sign heading into Q2 with the industry-wide launch of RGB TVs, which we will touch on more later. We will also share plans in a moment to improve the performance of our appliances category where Q1 sales continued to be pressure and declined versus last year. Our online mix of domestic sales was steady at 32%. We continue to drive faster delivery for our customers. In Q1, 65% of online purchases were delivered or available for pickup within one day, up from approximately 60% last year. And our in-store pickup experience remains an important asset, with roughly 45% of online purchases picked up in a store. As expected, our sales growth increased as we progressed through the quarter, in part due to new product introductions and customers choosing to spend their higher tax refunds with us. Our Q1 results did not materially change our existing thinking around the customer. Consistent with the past several quarters, we see a customer who is still spending, but is value focused and attracted to sales moments. Importantly, while customers continue to be thoughtful about big ticket purchases, they are willing to spend on high price point products when they need to or when there is technology innovation. We are pleased with our first quarter performance and are maintaining our guidance for the year. This underscores the momentum in our business and provides multiple proof points of progress against the priorities that Jason will lay out shortly. As it relates to Jason, I would like to talk about the CEO succession news we announced last month. After much thought, I made the decision that now is the right time to step aside for me, for Best Buy, and for the next generation of leaders. While this was a difficult decision to make, it is made easier knowing that the board, through an extensive succession planning process that looked inside and outside these walls, has found the right person to serve as our next CEO. Jason will officially assume the role on November 1st, and he and I are working side by side until then to transition not just seamlessly, but in a way that continues to drive progress. He is the right person with the right vision to further accelerate our strategic priorities and to do so with urgency. I've had the privilege of seeing Jason grow from his role as a merchant to an executive leader whose industry expertise, vendor partnership and influence, maniacal customer focus, innovative thinking, history of driving strategic initiatives, and thoughtful decision-making will usher in an exciting and meaningful chapter at Best Buy. Most importantly, he shares my deep passion for this brand and our people and will work tirelessly to see it become even more successful. I would now like to turn the call over to Jason to discuss his priorities and provide key business updates for Q2 and the rest of the year.