BBY

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How BBY rewrote its risk factors

10-K ITEM 1A · FY2025 → FY2026

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words, now 8,549

New in FY2026

The risks are categorized using the following headings: external, strategic, operational, regulatory, compliance and legal, and financial and market.
Consumer demand for the products and services that we offer could be, or could continue to be, affected by a number of factors, including: real GDP growth, inflation, recession, consumer confidence, employment levels, effects of government closures, cost of living, uncertainty over the availability of government benefits, tax rates, availability of consumer financing, interest rates, housing market conditions, foreign currency exchange rates, the price of oil, gas and other commodities and other macroeconomic trends.
These macroeconomic conditions impact consumer behavior and spending in various ways, including: • whether consumers make a purchase; • how frequently consumers upgrade or replace their devices; • consumers' choice of brand, model or price-point; and • consumers' appetite for complementary services (for example, My Best Buy Plus™ or My Best Buy Total™ membership).
Any decrease in consumer demand due to macroeconomic conditions may negatively impact our financial results.
We are subject to specific pressures that may increase our product prices, including high consumer demand, inflation, governmental actions (e.g., tariffs) and supply chain disruptions.
Any economic factors or circumstances resulting in higher costs for transportation, labor, insurance, healthcare or commodities can increase our operating, selling, general and administrative costs and otherwise materially adversely affect our financial results.
Geopolitical tensions, both domestic and international, including issues related to trade routes, political instability and divisiveness, the potential implementation of more restrictive trade policies, tariff increases and/or volatility, the realignment of alliances or the renegotiation of existing trade agreements could continue to have a material adverse impact on our business.
While we directly import approximately 1% to 3% of our overall assortment, our global supply chain for consumer electronics is heavily reliant on vendor imports from foreign countries (including products sourced from China, Mexico and Southeast Asia).
Consequently, our financial results are highly sensitive to changes in trade policies, tariffs and cross-border logistics.
The scope, timing, and implementation of these policies remains uncertain and may result in new or modified tariff regimes, additional regulatory requirements, or further trade friction with U.S. trading partners.
The uncertainty caused by ongoing tariff volatility creates challenges for planning inventory, pricing and supply chain strategies, which could continue to impact our cost structure, supply chain stability and overall financial results.
Ongoing or emerging conflicts, including those in the Middle East, Ukraine and the South China Sea, may continue to impact fuel prices, inflation, the global supply chain, cybersecurity and other macroeconomic conditions, which may further adversely affect global economic growth, consumer confidence and demand for our products and services.
For example, any further deterioration of relations between Taiwan and China, the resulting actions taken, the response of the international community and other factors affecting trade with China or political or economic conditions in Taiwan could disrupt the manufacturing and distribution of products or hardware components in the region, such as semiconductors and television panels sourced from Taiwan or the broader array of products sourced from China.
Additionally, conflict in the Middle East, and the resulting disruption of transit through the Persian Gulf and the Strait of Hormuz, continues to disrupt global supply chain flows and impact fuel prices.
Furthermore, these conflicts or other international policies and efforts may impact, or continue to impact, our critical international trade routes, such as the Panama Canal, the Red Sea and the Suez Canal.
Such disruptions may increase shipping times or costs, which could adversely affect our operations and financial results.
Geopolitical tensions may provoke further retaliatory actions by our trading partners that may increase costs, disrupt our supply chain and/or impact our business operations.
China maintains significant control over the majority of rare earth elements, which are essential elements in many electronic devices.
Should China reinstate its export ban on rare earth elements or take other actions that restrict U.S. supply of these minerals, it would impact both the consumer electronics we sell and our business’s underlying technological infrastructure.
Catastrophic events could adversely affect our operating results.
Catastrophic events, including those driven or intensified by climate change, pose a growing risk to our operating results and financial performance.
The frequency and severity of natural disasters or extreme weather events (such as storms, blizzards, extreme temperatures, earthquakes, hurricanes, floods, fires and droughts) are increasing in many of our key markets, particularly in our three largest states by total sales (California, Texas and Florida).
We may experience other catastrophic events beyond natural disasters, including pandemics, civil unrest, power loss, telecommunications failures, software and hardware malfunctions, terrorism (including related cyber threats) and other acts of violence.
Additionally, the locations where we do business could continue to be the subject of unrest and national attention, which impacts our ability to operate.
The adverse effects of these events may be amplified should multiple events occur simultaneously, such as a natural disaster during a pandemic.
Such events may prevent our workforce and/or customers from reaching our stores and properties, disrupt segments of our supply chain and distribution network or impact critical third-party services.
These disruptions may impact our ability to procure goods or services necessary for operating our business and may affect our information technology systems, limiting our ability to transact with customers and fulfill orders.
Catastrophic events could result in significant physical damage to, or closure of, our facilities.
They may also necessitate preventative investments in our facilities and infrastructure.
Moreover, insufficient infrastructure investment may increase the risk that large-scale disruptive events could impact our critical infrastructure, potentially having a material adverse impact on our operations and financial performance.
We operate in a highly and increasingly dynamic industry sector fueled by constant technological innovation, advancement and disruption, including the rapid integration of artificial intelligence (“AI”) into consumer products.
If we fail to interpret, predict and react to these changes in a timely and effective manner, the consequences may include, but are not limited to: • failure to offer, or inability to secure an adequate supply of, the products and services that our customers want; • excess inventory, which may require heavy discounting, liquidation or storage; • delays in adapting our merchandising, marketing or supply chain capabilities to accommodate changes in product trends; and • damage to our brand and reputation.
We constantly strive to offer consumers the best value in a highly competitive retail sector.
We compete against many local, regional, national and international retailers (both online and brick and mortar), as well as against some of our vendors and mobile network carriers that are leveraging their own direct-to-customer channels to market and sell products.
Shoppers are increasingly price-conscious when making discretionary purchases.
At the same time, online and multi-channel retailers are prioritizing fast, low-cost delivery options, including curbside pickup and guaranteed shipping times.
Because our strategy is based on offering superior levels of customer service and a full range of complementary services, our cost structure may be higher than some of our competitors, creating additional margin pressure.
Failure to manage these factors effectively while offering competitive delivery options could negatively impact our profit margins and the demand for our products.
Our ability to remain competitive also depends on effectively maintaining and growing our customer base and accurately forecasting their spending levels.
An inability to drive traffic to physical and digital channels or to maintain brand relevance with target audiences could pose both an operational and financial risk.

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Gone since FY2025

The risks are categorized using the following headings: external, strategic, operational, regulatory and legal, and financial and market.
Consumer demand for the products and services that we offer could be affected by a number of factors, including: real GDP growth, inflation, recession, consumer confidence, employment levels, cost of living, tax rates, availability of consumer financing, interest rates, housing market conditions, foreign currency exchange rates, the price of oil, gas and other commodities, and other macroeconomic trends.
These macroeconomic conditions impact consumer behavior and spending in various ways, including:  whether or not they make a purchase;  how frequently they upgrade or replace their devices;  their choice of brand, model or price-point; and  their appetite for complementary services (for example, My Best Buy Plus™ or My Best Buy Total™ membership).
Any decrease in consumer demand due to macroeconomic conditions may negatively impact our financial results. ‎ We are subject to specific pressures that may increase our product prices, including high consumer demand, inflation, tariffs and supply chain disruptions.
Any economic factors or circumstances resulting in higher transportation, labor, insurance costs, healthcare costs or commodity prices can increase our cost of sales and operating, selling, general and administrative expenses and otherwise materially adversely affect our financial results.
Geopolitical tensions, both domestic and international, including issues related to trade routes, political instability and divisiveness, the potential implementation of more restrictive trade policies, higher tariffs or the renegotiation of existing trade agreements could have a material adverse impact on our business.
While we directly import approximately 2% to 3% of our overall assortment, our complex supply chain is heavily reliant on vendor imports from China and Mexico, which we currently estimate make up approximately 55% and 20%, respectively, of the products we purchase.
Moreover, the consumer electronics we sell and our underlying technological infrastructure are dependent on rare earth elements, predominantly processed in China.
Recently passed or proposed tariffs involving these countries could have an adverse impact on our operations.
Any further changes in, or uncertainty surrounding, trade policies with these countries, including tariffs on products and parts imported by us or our vendors, as well as any international retaliatory actions, could increase costs, disrupt our supply chain and/or impact the availability of underlying technology critical to our operations.
Additionally, changes in, or uncertainty surrounding, policies or efforts that may affect the flow of trade, especially those impacting critical international trade routes, such as the Panama Canal and the Suez Canal, could potentially cause disruption to the global supply chain and may adversely affect our operations and financial results.
Ongoing or emerging conflicts, including those in Ukraine, the Middle East and the South China Sea, may continue to impact fuel prices, inflation, the global supply chain, cybersecurity and other macroeconomic conditions, which may further adversely affect global economic growth, consumer confidence and demand for our products and services.
For example, attacks on cargo ships in the Red Sea, catalyzed by tensions in the Middle East, continue to disrupt global trade flows and shipping capacity.
Additionally, any further deterioration of relations between Taiwan and China, the resulting actions taken, the response of the international community and other factors affecting trade with China or political or economic conditions in Taiwan could disrupt the manufacturing and distribution of products or hardware components in the region, such as semiconductors and television panels sourced from Taiwan or the broader array of products sourced from China.
These trade restrictions and any associated political uncertainty surrounding international trade measures and international relations may affect market stability and consumer confidence.
Catastrophic events, including the effects of climate change, could adversely affect our operating results.
The risk and actual occurrence of various catastrophic events could have a material adverse effect on our financial performance.
Events that affect our properties, supply chain, partners, workforce or customers may consist of, or be caused by, for example:  natural disasters or extreme weather events (such as storms, blizzards, extreme temperatures, earthquakes, hurricanes, floods, fires and droughts), including those related to, or exacerbated by, climate change;  diseases or pandemics;  power loss, telecommunications failures, or software and hardware malfunctions; and  terrorism (including related cyber threats), civil unrest, violent acts or other conflicts.
The number and severity of certain catastrophic events is increasing in many of our markets.
Such events can adversely affect our workforce and prevent employees and customers from reaching our stores and properties.
Catastrophic events can also disrupt portions of our supply chain, distribution network and third-party services, and may impact our ability to procure goods or services required for operating our business.
Such events can also affect our information technology systems, resulting in disruption to various aspects of our operations, including our ability to transact with customers and fulfill orders.
The adverse effects of any such catastrophic event would be exacerbated if experienced at the same time as another unexpected and adverse event, such as a pandemic.
Three of our largest states by total sales (California, Texas and Florida) are particularly vulnerable to natural disasters and extreme weather conditions.
Natural disasters and climate-related events in these states, and other areas where our sales and operations are concentrated, could result in significant physical damage to, or closure of, our facilities and may require upgrades to our facilities and infrastructure.
Additionally, heightened violence and crime in or around our stores, customer homes or businesses where we are performing services may further jeopardize the safety and security of our workforce and customers as well as the general operation of our stores.
Further, social unrest/tension, and any related potential for violence, may impact our workforce, customers, properties and the communities where we operate.
If our customers, employees and shareholders do not perceive our response to be appropriate or adequate, we could suffer damage to our reputation and brand, which could adversely affect our business.
We operate in a highly and increasingly dynamic industry sector fueled by constant technological innovation and disruption, including most recently by the proliferation of artificial intelligence (“AI”) technologies.
If we fail to interpret, predict and react to these changes in a timely and effective manner, the consequences may include, but are not limited to:  failure to offer, or inability to secure an adequate supply of, the products and services that our customers want;  excess inventory, which may require heavy discounting or liquidation;  delays in adapting our merchandising, marketing or supply chain capabilities to accommodate changes in product trends; and  damage to our brand and reputation.
While we constantly strive to offer consumers the best value, the retail sector is highly competitive.
Price is of great importance to most customers, and price transparency and comparability continues to increase.
Digital technology enables consumers to compare prices on a real-time basis, putting additional pressure on us to maintain competitive prices.
We compete against many local, regional, national and international retailers (both online and brick and mortar), as well as against some of our vendors and mobile network carriers that market their products directly to consumers.
Competition is becoming increasingly diverse, including in the advertising revenue space and with the proliferation of marketplace platforms offering products at increasingly lower prices.
The retail sector continues to experience increased sales initiated online and using mobile applications, as well as online sales for both in-store or curbside pick-up.
Online and multi-channel retailers continue to focus on delivery services, with customers increasingly seeking faster, guaranteed delivery times and low-cost or free shipping.
Our ability to offer competitive delivery times and delivery costs depends on many factors and our failure to successfully manage these factors and offer competitive delivery options could negatively impact the demand for our products and our profit margins.
Because our business strategy is based on offering superior levels of customer service and a full range of services to complement the products we offer, our cost structure might be higher than some of our competitors, and this, in conjunction with price transparency, could put pressure on our margins.
Further, as our competitors develop and expand their strategic use of AI, our operations and profitability could be adversely impacted if we fail to execute or maintain our own focused AI strategy enabling technology advancement and innovation.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2025 ↗, FY2026 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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