Best Buy Co BBY · USD

13. Segment and Geographic Information Segment and category revenue information was as follows ($ in millions) : 2025 2024 2023 Domestic: Computing and Mobile Phones $ 17,103 $ 16,930 $ 18,191 Consumer Electronics 11,148 12,014 13,040 Appliances 4,589 5,469 6,381 Entertainment 2,641 3,063 2,786 Services 2,456 2,357 2,149 Other 301 264 247 Total Domestic revenue $ 38,238 $ 40,097 $ 42,794 International: Computing and Mobile Phones $ 1,578 $ 1,552 $ 1,575 Consumer Electronics 917 955 1,054 Appliances 321 335 355 Entertainment 267 300 267 Services 175 173 183 Other 32 40 70 Total International revenue 3,290 3,355 3,504 Total revenue $ 41,528 $ 43,452 $ 46,298 Our CODM regularly reviews a range of financial and non-financial information to evaluate the performance of, and determine resource allocation for, the consolidated enterprise, the Domestic segment and the International segment. Adjusted operating income is the primary financial performance measure used by our CODM, which includes revenue and significant expenses – cost of sales and adjusted SG&A. Our CODM reviews adjusted operating income and its components via the annual budget and the ongoing monitoring of variances to budget, forecasts and prior periods. 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): 2025 Domestic (1) International Total Revenue $ 38,238 $ 3,290 $ 41,528 Cost of sales 29,591 2,552 32,143 Adjusted SG&A (2) 7,000 630 7,630 Adjusted operating income $ 1,647 $ 108 $ 1,755 Restructuring charges ( 3 ) Goodwill impairment 475 Intangible asset amortization 21 Operating income 1,262 Other income (expense): Investment income and other 84 Interest expense ( 51 ) Earnings before income tax expense and equity in income of affiliates $ 1,295 (1) Domestic segment adjusted operating income includes certain operations that are based in foreign tax jurisdictions and primarily relate to sourcing products into the U.S. (2) Adjusted SG&A excludes amortization of definite-lived intangible assets associated with acquisitions.

9. Revenue We generate substantially all 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): February 1, 2025 February 3, 2024 Receivables (1) $ 504 $ 512 Short-term contract liabilities included in: Unredeemed gift cards 253 253 Deferred revenue 951 1,000 Accrued liabilities 50 53 Long-term contract liabilities included in: Long-term liabilities 229 245 (1) Receivables are recorded net of allowances for expected credit losses of $ 20 million and $ 23 million as of February 1, 2025, and February 3, 2024, respectively. During fiscal 2025 and fiscal 2024, $ 1.1 billion and $ 1.3 billion 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 Fiscal 2026 $ 32 Fiscal 2027 33 Fiscal 2028 29 Fiscal 2029 26 Fiscal 2030 26 Thereafter 115 See Note 13, Segment and Geographic Information , for information on our revenue by segment and category.

12. 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 $ 71 million as of February 1, 2025.

7. Debt Short-Term Debt U.S. Revolving Credit Facility On April 12, 2023, 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 permits borrowings of up to $ 1.25 billion and expires in April 2028. There were no borrowings outstanding under the Five-Year Facility Agreement as of February 1, 2025, or February 3, 2024. The interest rate under the Five-Year Facility Agreement is variable and, absent certain events of default, is determined at our option as: (i) the sum of (a) the greatest of (1) JPMorgan Chase Bank, N.A.’s 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” as defined in the Five-Year Facility Agreement) 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 unsecured debt rating. Under the Five-Year Facility Agreement, the ABR Margin ranges from 0.00 % to 0.100 %, the Term SOFR Margin ranges from 0.680 % to 1.100 %, and the facility fee ranges from 0.070 % to 0.150 %. The Five-Year Facility Agreement is guaranteed by certain of our subsidiaries and contains customary affirmative and negative covenants. Among other things, these covenants restrict our and certain of our subsidiaries’ abilities to incur liens on certain assets, make material changes in corporate structure or materially alter the nature of our business, dispose of material assets, engage in mergers, consolidations and certain other fundamental changes, or engage in certain transactions with affiliates. The Five-Year Facility Agreement also contains a covenant that requires the registrant to maintain a maximum quarterly cash flow leverage ratio. The Five-Year Facility Agreement contains customary default provisions, including, but not limited to, failure to pay interest or principal when due and failure to comply with covenants.

10. Income Taxes Reconciliations of the federal statutory income tax rate to income tax expense were as follows ($ in millions): 2025 2024 2023 Federal income tax at the statutory rate $ 272 $ 340 $ 376 State income taxes, net of federal benefit 52 57 63 Change in unrecognized tax benefits ( 5 ) ( 6 ) ( 45 ) Expense (benefit) from foreign operations 3 ( 5 ) ( 2 ) Tax credits ( 23 ) ( 13 ) ( 8 ) Goodwill impairments (non-deductible) 63 - - Other 10 8 ( 14 ) Income tax expense $ 372 $ 381 $ 370 Effective income tax rate 28.7 % 23.5 % 20.7 % Earnings before income tax expense and equity in income of affiliates by jurisdiction were as follows ($ in millions): 2025 2024 2023 United States $ 1,095 $ 1,389 $ 1,533 Foreign 200 232 255 Earnings before income tax expense and equity in income of affiliates $ 1,295 $ 1,621 $ 1,788 Income tax expense (benefit) was comprised of the following ($ in millions): 2025 2024 2023 Current: Federal $ 341 $ 452 $ 213 State 67 104 64 Foreign 23 39 42 431 595 319 Deferred: Federal ( 55 ) ( 177 ) 33 State ( 7 ) ( 37 ) 19 Foreign 3 - ( 1 ) ( 59 ) ( 214 ) 51 Income tax expense $ 372 $ 381 $ 370 Deferred taxes are the result of differences between the bases of assets and liabilities for financial reporting and income tax purposes. Deferred tax assets and liabilities were comprised of the following ($ in millions): February 1, 2025 February 3, 2024 Deferred revenue $ 125 $ 127 Compensation and benefits 75 91 Stock-based compensation 29 32 Other accrued expenses 46 45 Operating lease liabilities 758 730 Loss and credit carryforwards 163 173 Property and equipment 57 - Other 48 42 Total deferred tax assets 1,301 1,240 Valuation allowance ( 172 ) ( 175 ) Total deferred tax assets after valuation allowance 1,129 1,065 Inventory ( 92 ) ( 45 ) Property and equipment - ( 49 ) Operating lease assets ( 734 ) ( 701 ) Goodwill and intangible assets ( 61 ) ( 81 ) Other ( 19 ) ( 22 ) Total deferred tax liabilities ( 906 ) ( 898 ) Net deferred tax assets $ 223 $ 167 Net deferred tax assets were included in Other assets on our Consolidated Balance Sheets as of February 1, 2025, and February 3, 2024. As of February 1, 2025, we had deferred tax assets for net operating loss carryforwards from international operations of $ 112 million, of which $ 30 million will expire in various years through 2042 and the remaining amounts have no expiration; acquired U.S.

6. Leases Supplemental balance sheet information related to our leases was as follows ($ in millions): Balance Sheet Location February 1, 2025 February 3, 2024 Assets Operating leases Operating lease assets $ 2,833 $ 2,758 Finance leases Property under finance leases, net (1) 34 43 Total lease assets $ 2,867 $ 2,801 Liabilities Current: Operating leases Current portion of operating lease liabilities $ 617 $ 618 Finance leases Current portion of long-term debt 10 13 Non-current: Operating leases Long-term operating lease liabilities 2,282 2,199 Finance leases Long-term debt 15 21 Total lease liabilities $ 2,924 $ 2,851 (1) Finance leases were recorded net of accumulated depreciation of $ 54 million and $ 54 million as of February 1, 2025 and February 3, 2024, 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 2025 2024 2023 Operating lease cost (1) Cost of sales and SG&A (2) $ 784 $ 777 $ 780 Variable lease cost Cost of sales and SG&A (2) 236 239 233 Sublease income SG&A ( 13 ) ( 11 ) ( 12 ) Total operating lease cost $ 1,007 $ 1,005 $ 1,001 (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): 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows $ 781 $ 772 Lease assets obtained in exchange for new lease liabilities $ 771 $ 717 Weighted average remaining lease term (in years) 5.4 5.2 Weighted average discount rate 4.1 % 3.6 % Future lease payments under our non-cancellable operating leases as of February 1, 2025, were as follows ($ in millions): Operating Leases (1) Fiscal 2026 $ 723 Fiscal 2027 703 Fiscal 2028 574 Fiscal 2029 429 Fiscal 2030 312 Thereafter 522 Total future undiscounted lease payments 3,263 Less imputed interest 364 Total reported lease liability $ 2,899 (1) Lease payments exclude $ 19 million of legally binding fixed costs for leases signed but not yet commenced.

We rely heavily on information technology systems to operate and manage all key aspects of our business. We also process substantial volumes of confidential business information and sensitive consumer and employee personal information, which if impacted by cyber threats, could result in financial and reputational harms and regulatory sanction. We have developed and implemented, and update on an ongoing basis, a risk-based information security program designed to identify, assess and manage material risks from cybersecurity threats. Cybersecurity Risk Management and Strategy Our information security program comprises administrative, technical and physical safeguards designed, under a risk-based approach, to reasonably mitigate cybersecurity risks to the confidentiality, integrity or availability of our information systems and information. These include safeguards designed to oversee service-provider relationships in a manner consistent with the risks presented by the engagement and use of the service provider. The program deploys multiple layers of controls designed to identify, protect against, detect, respond to and recover from information security and cybersecurity incidents and our Cyber Security Incident Response Team, which is part of our Enterprise Information Protection (“EIP”) organization, plays a core role in detecting, mitigating and remediating cybersecurity incidents. Based on the nature and severity of the incident, our response is to be guided by documented incident response plans. These plans outline steps to be followed, functional areas to be engaged, internal escalations to be pursued (which may include, as appropriate, senior management, executive management and the Board) and stakeholders to be notified. Third parties also play a role in our cybersecurity. We engage third parties for advice and support in the design and implementation of certain program elements and leverage third-party tools to help identify and mitigate cybersecurity risks. Certain specific, defined components of our technology environment are assessed by third-party auditors with a view to align with industry standards such as, for example, the Payment Card Industry Data Security Standards. We also periodically retain outside expertise to conduct a maturity assessment of our program against industry standards and participants.

11. Benefit Plans We sponsor retirement savings plans for employees meeting certain eligibility requirements. Participants may choose from various investment options, including a fund comprised of our company stock. Participants can contribute up to 50 % of their eligible compensation annually as defined by the plan document, subject to Internal Revenue Service limitations. After one year of service, we will match 100 % of the participant’s eligible contributions that do not exceed 3 % of compensation, plus 50 % of eligible contributions that exceed 3 % but do not exceed 5 % of compensation. Employer contributions vest immediately. Total employer contributions were $ 71 million, $ 76 million and $ 77 million in fiscal 2025, fiscal 2024 and fiscal 2023, respectively. We offer a non-qualified, unfunded deferred compensation plan for highly-compensated employees and members of our Board. Amounts contributed and deferred under the plan are invested in options offered under the plan and elected by the participants. The liability for compensation deferred under the plan was $ 20 million and $ 24 million as of February 1, 2025, and February 3, 2024, respectively, and is included in Long-term liabilities on our Consolidated Balance Sheets. See Note 4, Fair Value Measurements , for the fair value of assets held for deferred compensation.