Ladies and gentlemen, thank you for standing by. Welcome to Best Buy's Second Quarter Fiscal 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded for playback and will be available by approximately 1:00 p.m. Eastern time today. [Operator Instructions] I will now turn the conference call over to Mollie O'Brien, Vice President of Investor Relations.

Thank you, and good morning, everyone. Joining me on the call today are Corie Barry, our CEO, and Matt Bilunas, our CFO. During the call today, we will be discussing both GAAP and non-GAAP financial measures. A 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 10-K and subsequent 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. I will now turn the call over to Corie.

Good morning, everyone, and thank you for joining us. Today, we are reporting better-than-expected results for the second quarter. Our comparable sales performance sequentially improved to a decline of 2.3% compared to our guidance of down 3% and last quarter's decline of 6.1%. At the same time, we delivered a non-GAAP operating income rate of 4.1%, which was higher than our guide of 3.5%, due to lower-than-expected SG&A expense. On a year-over-year basis, our non-GAAP OI rate expanded 30 basis points, largely due to gross profit rate expansion in our membership and services offers. From a category perspective, we drove comparable sales growth in tablets, computing and services. This growth was more than offset by declines in appliances, home theater and gaming. We delivered strong results in our domestic tablet and computing categories, which together posted comparable sales growth of 6% versus last year. With our market position, expert sales associates and compelling merchandising, we capitalized on demand, driven by our customers' desire to replace or upgrade their products, combined with new innovation. Overall, customers remained deal focused and attracted to more predictable sales moments. With 4th of July, Black Friday in July, and the beginning of back-to-school sales events, July comps were the best of the quarter. In this environment, many categories, including major appliances and TVs, continued to be very promotional in pursuit of stimulating interest and sales. We were targeted and thoughtful regarding where and when we made our promotional investments, strategically balancing profitability and sales. Our omnichannel operations provided strong support for our Q2 online sales, which remain consistent at 32% of domestic revenue. Almost 60% of our packages are delivered or available for pickup within one day, and more than 40% of our digital sales are picked up in stores by our customers with more…

Good morning, everyone. Let me start by sharing a few details on our second quarter results. Enterprise revenue of $9.3 billion, declined 2.3% on a comparable basis. Our non-GAAP operating income rate of 4.1% improved 30 basis points compared to last year, which was driven by improvement in our gross profit rate. Non-GAAP SG&A dollars were $53 million lower than last year and were flat as a percentage of revenue. Our non-GAAP diluted earnings per share increased 10% to $1.34. By month, our comparable sales decreased 2% in May, and 4% in June, before improving to be approximately flat in July. As a reminder, our comparable sales are not -- are computed on a like-for-like fiscal weeks and are not shifted to more closely aligned calendar weeks following last year's 53rd week year. For the year, we estimate the impact to be immaterial. In the second quarter, the calendar shift benefited our reported comparable sales by approximately 90 basis points. The shift negatively impacted our first quarter comparable sales by approximately 30 basis points. We expect it to negatively impact our comparable sales by approximately 20 basis points in the third quarter and 60 basis points in the fourth quarter. Back to our Q2 results. Compared to the outlook we shared and during the quarter, our non-GAAP operating income rate of 4.1% was 60 basis points higher, was primarily driven by lower non-GAAP SG&A. The favorable SG&A was primarily due to lower employee benefit expense, which included medical claims, lower technology expense and a favorable legal settlement. Our overall gross profit rate aligned very closely to our expectations with better-than-expected performance in our services category offering, offsetting -- better performance in our service category offsetting the lower product margins. Next, I will walk through the details on our second quarter…

[Operator Instructions] Our first question comes from the line of Scot Ciccarelli with Truist Securities. Please go ahead.

Good morning, guys. Two quick ones, hopefully. First, can you remind us of the comparisons you faced for the balance of the quarter given your comments that you're running -- you ran around flat for August. And then secondly, can you help us better understand the mix that you're seeing in the laptops, obviously, kind of later quarter where you got to roll out a lot of the AI-enabled chip devices. But just how quick are consumers kind of adopting to that? Thank you.

Yeah. So in terms of the comparative, I think it was the first part of the question, last year, our August was down about -- I think we talked about this down 6%, September I think it was down around 7% and October was down about 8%. So pretty similar across the quarters last year. And the second part related to...

Yeah. As it relates to the laptop mix, for the quarter, Copilot+ was still a relatively small percentage of the sales. And we've said it before, like most new and emerging technology, these are higher price points, ASPs, more fully featured devices. So that's why in the prepared comments, we kind of tried to make it clear. We continue to see people just want to replace and upgrade not dependent on just the Copilot+ computing, but just broadly, in general, continuing that trend we've been talking about basically since Q4 of last year where we started saying those laptop units were growing year-over-year. We continue to see that. So while Copilot+ was a relatively small percentage, we like what we're seeing in terms of consumer behavior. The last thing that I would say is it's not just about Copilot+ per se. It creates a nice halo effect on the entire department, right? We've talked about adding in more expertise. We've talked about updating and upgrading the displays in the stores. We've put a lot into the kind of the discovery work that we're doing in our app and all of those things have a nice halo effect across the category.

Got it. Thanks guys.

Our next question comes from the line of Michael Lasser with UBS. Please go ahead.

Good morning. Thank you so much for taking my question. So the second quarter came in a little bit better than you were expecting. August is flat so far. You have easier comparisons in September and October, yet you took down the comp guidance for the rest of the year. So, what motivated that change?

I think -- good morning. I think in general, what we are acknowledging is, it is still an unpredictable and uneven consumer environment. And while we made it explicit to say we haven't seen anything so far this year that changes behavior. I think we're acknowledging there will be an election impact, and there always is, historically, no matter what kind of election we're entering into. So we know that, that is likely coming. And you're entering into the holiday season, which often can also create some unpredictable consumer behaviors, probably consumers who might even wait for some of the more values that they -- I would guess, assume that they're going to see over holiday. And so I think we're looking at consumer indicators that continue to be uneven, resilient consumers so far but acknowledging into the back half, there especially at the tail end of Q3, there's probably an even greater risk that the consumer is a little bit unsettled.

Understood. My follow-up question is, so you're seeing signs of stabilization in the category. It would appear that your market share is also stabilizing. So, a, is that a fair assessment on your market share? And, b, if we make the assumption that this continues into next year, ultimately resulting in positive sales growth in 2025, what are going to be the critical puts and takes in your profitability that are going to influence the incremental margins as you do experience an upturn in sales? Thank you very much.

I will take part one and then hand it over to Matt for part two. So as it relates to share, I think the perception of rough stabilization feels right. Now let me start by saying, I like you talking about next year, share is a long game for us. It's not exactly a perfect science quarter-by-quarter. And we've been pretty clear to say this is a really hard industry to measure because there isn't a great source that's going to walk you through everything as it relates to share. So we talked about in some categories, we absolutely feel like we've had a strong and good share gain position. Think about things like the computing conversation we were having or even year-to-date, what we've been seeing in gaming, I think we've had some really strong positioning. I think there are some other categories, we’re back to your point about stabilization, we're starting to see at least a little bit better stabilization. TVs is one that's been uneven depending on the quarter. But it feels like, I think the team has done a really nice job leaning into the spaces where we play best, our exclusive brands, our large, large -- extra large screens, think 92 inches plus, and I think that is helping. I think there are still some spaces where, again, we saw maybe slightly sequentially better results, but still not where we want to be. And in that, I would talk about major appliances as an example, where we've been pretty transparent. That's an incredibly promotional category right now. It is also a category that is skewing almost 80% to [duress] (ph) sales right now based on the data that we can see, which is, again, not exactly the place where we tend to play best for a little bit more of a complete solutions and so the housing slowdown definitely disproportionately hurts us. So, Michael, I think at the highest level, this idea of moderation feels right, but we're really targeting kind of at the category level where and how we want to play with a consumer who's very either value-oriented or innovation replacement-oriented.

Yeah. And so how it relates to next year, I think obviously, we're not going to provide long-term guidance today. But as we think about the next few years as that industry continues to grow as we expect it to and we continue to try to drive our market share with it, we would also expect to be able to expand our OI rate over that time as well. It's a little early to talk entirely about the puts and takes for next year. I think what we've been able to do is be very thoughtful about our cost reductions and efficiencies to drive improved profitability from that regard. And then there's a layering in of the other initiatives that we would hope to contribute also positively to the OI rate over time. I think the other parts of the business, supply chain, at this point, as much as we can see somewhat neutral as it relates to a year-over-year perspective next year. But again, obviously, we'll know more as we get towards the end of this year and provide more updates.

One last thing that I can't resist adding, Michael, on the share conversation, I just want to make it clear, we do tend to outperform when there's innovation and when we can leverage our competitive differentiation. And we absolutely, even though the Copilot+ side of things is small right now, it definitely underscores kind of that part of our thesis, that is the space where we tend to outperform.

Thank you very much and good luck.

Thank you.

Our next question comes from the line of Mike Baker with D.A. Davidson. Please go ahead.

Okay, thanks. Two questions for me. One, just -- so laptops, computers doing well even without the Copilot+, and that feels like about the right timing in terms of product cycles, four years after everyone upgraded around COVID, and that's usually the product cycle for laptops. I guess, I'm interested in what's next. What's the next product cycle that you think starts to show an improvement for you?

So I want to make sure that I clarify. Laptops were strong. We also made it a point to say tablets were strong and we're kind of looking at those things together because the newest lineups of tablets that we're seeing, particularly from Apple, are at the same processing power and same price points as some of the most premium laptops that we sell. So I think that's -- the reason I bring that up is because both are lovely examples of not massive innovation, but enough innovation in terms of the strengths of these devices, the look and feel of the devices. We also talked just briefly in our comments about desktops, particularly gaming desktops have been incredibly strong. Again, higher price point, innovation in terms of processing power, and kind of a new way to game even as the console side of the business has been a little bit softer. I can see us heading into based on what's out there and has been announced. Obviously, Apple will make larger announcements here in about a week and a half, but they have made it clear Apple Intelligence is important to them. And again, that's important because it's not just about a phone launch, Apple Intelligence will stretch across devices, it will be on your tablet, it will be on your Mac, it's going to be on your phone. And so the way I characterize this is, it's not so much a revolution, it's an evolution. And I think you're going to see AI capabilities bleed into my point of view, everything with a screen, I think the first realms will be computing, whether that's laptop, ultimately desktop, tablets, and phones, and in most of those cases you're going to want that higher processing power in those devices, obviously potentially proliferating further from there as you think about smart home capabilities or even televisions and the processing and smarts that you might need to stream effectively. So I think that's why we think it's this longer cycle for us, and we've been really clear in saying we never expected everyone to be lined up at the door waiting for their AI devices. It's more that this continues to proliferate across screens.

Yeah, okay. Fair enough. Appreciate that. If I could just ask one clarification question. The monthly trends, May, June, July, July being flat, how much of that was impacted by the calendar shift? In other words, so the way you talked about, July was the best month of the quarter. Was that because of the calendar shift or anyway to sort of quantify that impact?

Yeah, we're not going to try to parse out the overall quarterly impact of the week shift by month. But in Q2, more, I would say generally more -- most of that impact was in May versus July. So July relatively not impacted by that week shift.

Got it. Perfect. Thank you.

Thank you.

Our next question comes from the line of Greg Melich with Evercore ISI. Please go ahead.

Hi, thanks. I wanted to dig a little bit deeper into gross margin. I know that the membership program is getting more profitable. I'd love to hear an update on how the membership program is developing in and of itself and how those folks are behaving as consumers.

Sure. So, as I always will do, rewind the tape and just talk first, what do we want our membership program to do? You have a membership program because consumers are less brand loyal than they've really ever been historically. And in our case, the goal of membership is to drive both customer engagement and increased share of wallet. So this idea that every time I want to buy CE, why would I go anywhere else? Because Best Buy is the place for me. And we look at really three main areas of engagement. One is acquisition, the second is engagement, and the third is retention. So to your question about like how's it performing, well across those things what can we see? One, we continue to grow our new customers in Q2 compared to Q2 of last year, our new paid customers. Now, again, part of that is we have a new tier in the plus tier along with the total tier, but we like what we're seeing because the whole objective there was to make membership available to a broader population of people. And so we do see materially -- material growth in those numbers year-over-year for the quarter. The second thing we are seeing is, for sure our paid members consistently show higher levels of engagement and interaction with comparatively higher levels of spend at Best Buy. So again, back to that original thesis, when people do purchase a membership, it is doing what we want it to do. They're engaging more with us and they're spending more. So we like what we're seeing there. It's still super early. We just lapped the launch of the new tiers and new construct in June. But at this point, our retention rates are also outperforming our expectations for both total and plus. So the early, early indicators, and again, this is, I know I always say this, but we need a little bit of time because our frequency is comparatively lower than other retailers, so it takes us a bit longer to understand our customer behaviors. But on the whole, we are very pleased with what we're seeing in our membership program. And you can imagine we will continue to think through how do we iterate or add potentially different offers into that mix as we go forward.

Great. I'd love to follow up on that. I think you guys mentioned that some of the promotional environment was bad in appliances. In your guidance for the second half, do you expect that to get better or worse and maybe highlight any other categories where that could get better or worse?

Yeah, I think generally we probably expect the promotional -- promotionality we saw in both Q1 and Q2 to continue on for the rest of the year. It's quite promotional in many of our categories. Appliances we talked about, televisions is still pretty competitive and promotional with that trade of tearing down of purchasing. Computing is always promotional as you get in and so I think we're just -- and we've prepared our guidance reflect our need to be competitive as we look out to Q3 and Q4.

That's great. And then just one housekeeping. Did I hear something in SG&A, a legal settlement? Did I get that right?

Yeah, we had a one-time legal settlement within the credit card processing area. It should not recur. It was just a one-time benefit to SG&A in the second quarter.

Could you quantify it?

It's around $10 million.

Got it. All right. Well, good luck and thanks, guys.

Thank you.

Our next question comes from the line of Steve Zaccone with Citi. Please go ahead.

Great. Good morning. Thanks for taking my question. I wanted to double click on the second half outlook. So, with August flat, can you just help us understand how back-to-school is performing overall relative to plan? Presumably there'll be some more newness as we get into September. And then can you just help us think through the implied outlook in the fourth quarter, just given the guidance reduction on same-store sales, maybe what can help you get to the high-end of the range versus the low-end of the range, specifically in that fourth quarter, since holiday is so important?

Good morning, Steve. As it relates to back-to-school performance, I would say it's performing basically in line with our expectations. Now, to your point about September, what's a little tricky is over the last many years, we've actually seen back-to-school kind of push further into September. It almost seems like people are weighing what it is exactly they're going to need to go back to school with. So, we still have a chunk of the season in front of us. But so far, I would say it is playing to our expectations, which again, sits under our whole point of view that we're not seeing a lot right now in customer behavior that's saying they're behaving incredibly differently.

Yeah, as it relates to Q4, I think obviously our range reflects something that's anywhere from down 3% to up 2%. I think obviously we're planning for a lot of different outcomes. On the high end, I think we would expect, obviously computing and tablets to continue to be strong as we look at the back half of the year. I think generally there's an improvement in most of our categories, maybe not positive, but the declines would improve. We are also cognizant of, we have continued price investments, increased marketing in the back half even more than the first half of the year, and dedicated labor will start to be actually more fulsome in the back half as we’re still ramping up the televisions and appliance areas. So all those things should help us improve. I also know that TVs would be an area we would expect to improve as the quarters Q3 and Q4 progresses. In that area I think there's an expectation that the very large televisions, the 97 inches and above, are able to help us improve the trend of performance there, amongst other things. So, at the high end, those are the things that would support the top end. Obviously at the bottom end, we would expect in an industry and a performance that's more in line with where we saw comps in Q2, just a general non-improvement or just a more stagnant level within the industry than what we've been seeing more recently.

Okay, thanks for that. The follow-up I had is just on the growth in tablets and computers, can you talk through how ASPs performed relative to units? And as we think about the path forward, where we go from replacement cycle to maybe more newness sprinkling into the assortment, is there potential for ASPs to increase as we get into next year, specifically in that category?

Yeah, generally, we're not going to go through organics in too much detail. It's not how we plan our business, but in Q2 when you look at mobile computing or the notebooks area, I would say ASPs were actually slightly flat to down a little bit within the notebook category. Tablets, they would be up with the new innovation. As you go forward, those mixes can change a little bit based on the -- with the notebooks you see, we'll see more AI enabled computers, which should generally probably drive the price points up a little bit. And so ASPs could potentially move up. Tablets could depend upon when you get into the holidays. It's also a very promotional idea. So you can see ASPs maybe come down a little bit. But generally, again, we don't really plan our business on those organics. We reflect more of like what are the launches and where are the categories at in their cycles.

In general, the concept that the proliferation of innovation across the category tends to drive in the early stages of the innovation, higher ASPs, that does tend to be the case. So I think the hypothesis that as we see innovation in these kinds of categories, you start to, and as it gets large enough as a part of the category, it definitely can help support some of the greater ASPs. That being said, I really want to underscore what Matt said, which is we are an environment that is highly promotional and price sensitive and a consumer who is as much as they're interested in the innovation, also looking for great deals and value. And so this for us, the objective is not ASP expansion. The objective is meeting the customer where they are across the full range of products that we have.

Understood. Best of luck in the second half.

Thank you.

Thank you.

Our next question comes from the line of Steven Forbes with Guggenheim. Please go ahead.

Good morning, Corie, Matt.

Good morning.

I was hoping maybe we could explore how you were thinking about and/or planning for the potential of wallet cannibalization within the category. Sort of, as you think about the impact of innovation, is it -- should we view it or do you view it as net incremental to wallet share spend or do you see the risk of cannibalization within the CE industry? Just trying to really gauge your overall confidence that the CE category as a whole, right, can get back to gaining share of total [PCE] (ph) spend.

For the category, we've been pretty explicit that there is this stacked layer of pressures on the category, which to your point, have overarchingly for the industry, made it difficult for the industry to grow. And we've talked about kind of five things. One, inflation, not on our stuff, but on the basics. You're starting to see that ease a little bit, though housing still is a real concern there. And that's going to take a little bit longer to ease. You have spend on experiences. People are continuing to want to spend on experiences versus goods. That's kind of a broad statement, but it's been true and that has remained relatively sticky, although you're starting to see that pull back just a little bit in some of the early indicators. You got a stagnant housing market. You're just not seeing the turnover. That has continued, and I think it's going to take us a little bit of time to get out of that. Then there were kind of two other specifics that are more about our industry. There was a very large pull forward in COVID, where people spent a lot on these categories. And then secondarily, we have not seen innovation within the category. So what gives me some confidence going forward and why we've talked about moderation into the back half and why industry forecasts that tend to look at least a little bit positive for next year is particularly these last two things. Innovation proliferating throughout the categories and starting to lap, and we talked about it earlier, at 4.5 years out from the pandemic, starting to get into real replacement cycle timing where people are just going to want new devices. And that's why we keep our eyes on those indicators in particular. Because if you have those two indicators and you start to see a little bit of easing of inflation, in particular, that to us feels like you're starting to get the right combination of things for the total industry to your point about the share of the total, like, wallet with the big W. I think you start to see the total industry then rebound. So we'll keep our eye on those indicators. We'll continue to try to update you on what we're seeing. But I think what we've seen, even as we came out of Q1 and into Q2, is reinforcing our thesis on some of these things.

That's great to hear. And then just a quick follow-up. Tablets and computing up 6%. Any way to frame the percentage of the business today that those two categories represent, or maybe the percentage of the segment disclosure of computing mobile phones that those two categories represent?

I'd say notebooks or computing, part of that equation is considerably higher than the tablet side although tablet is a fairly sizable category. We've definitely broken those two out but notebook still is the bigger part of those two within the 6% in terms of the weight of the dollars.

And the two are definitely the bigger part of the overarching category as we break it.

Thank you.

Thank you.

Our next question comes from the line of Simeon Gutman with Morgan Stanley. Please go ahead.

Good morning, everyone, and nice job managing the year so far. I wanted to ask, this was touched on, I wanted to get maybe some more texture, Matt, first on the gross margin between Q3, Q4, I know you talked about what you're planning in terms of promotion, but any texture between the two quarters and the back half of the year?

Generally speaking, the back half gross profit rate expansion for Q3 and Q4 are pretty similar. We do have the nuance that there is an extra week in Q4, which does have an impact on the gross profit rate a little bit. When you take that out, the two quarters are similar. Now, those two quarters are likely a bit lower than the first half of the year where we saw we were still lapping the membership program changes that we made. So, the net of the year should be 35 basis points of expansion, probably a little bit lower in the back half, a little bit higher in the first half, the drivers are very similar. There's product margin rate, pressure as you get into each Q3 and Q4. And I would say credit card profit share is probably more of a little bit pressure in Q3 than it would be in Q4. Those are probably the biggest items. But again, the drivers are really dissimilar. It's just more of us lapping that program change after Q2.

Okay. And then just a follow-up in the gross margin. This particular quarter, there was a benefit from higher services and then product margin was a little weaker. Can you quantify that and then thinking about product margin going forward, I guess as cycles come through, especially in mobile and computing, is there a premise that product margin can't be higher because of promotion or is promotion the biggest dictator of product margin going forward or should product margin start to lift as some of this new technology goes through the mix?

Yeah, I think -- in terms of the quantification, we haven't quantified it. I would say that the benefit from membership and services is significantly more than the overall expansion that we saw in Q1 and Q2. In terms of the broad dynamics of a promotion, I mean, for product margins you've got a number of items. You've got the promotionality level, so to the extent that the industry starts to stabilize and there's less promos needed to drive units, you could see that being a little bit of a relief or continued pressure depending on the environment we're sitting in. You always have a level of mix of categories, so there's some categories that have a little bit higher gross profit rate and some that are a little bit lower and that can sometimes have an impact. Those are the biggest items in terms of product margin rates. Assuming you're managing inventory well and you don't see excessive write-off markdowns, which we have not seen, I think those are usually the biggest things to think about.

Okay, thanks. Well done. Good luck in the back half.

Thank you.

Thank you.

Our next question comes from line of Christopher Horvers with JPMorgan. Please go ahead.

Thanks, good morning. So a couple of nuts and bolts questions. On the quarter-to-date being approximately flat, is that like you disclosed in May, like, your estimate of what the shift is impacting, so it's X any maybe shift benefit from the back-to-school timing? And then as you think about the headwind, does that essentially occur in October as a net headwind to the quarter?

Yeah, as I said, we're not going to get into the specifics of weekly impacts by month. I think if I step all the way back and think about, July was about flat in terms of comp sales. August we’re estimating to be approximately flat. The two quarters combined are approximately flat, which is an improvement in trend from what we saw in Q1 and even from what we saw in Q2. It's really difficult to estimate weekly shift impacts by month because it's not just the shift, you also have changes to the promotional calendar, you have different promotions in different weeks that can also impact it, so it's really difficult to break those down much beyond just a quarterly impact.

Got it. And then on the SG&A front, I know that you talked about adding back labor and you're adding back labor sort of at an increasing rate as you reset more departments. But then with the cost savings plan from the end of last year, I think the cost savings built over the year because not all the sort of strategies were put in place. So Is that fair and does that make SG&A dollars in the second quarter the right level to build from? Thank you.

Yeah, I think as it relates to SG&A, I think in the first half of the year, our SG&A was down about 4%. If you think about the back half of the year, the SG&A, when you remove the extra week, is anywhere from up 2% to flat on the low end for the second half. And so I think the S&A favorability in the first half isn't necessarily going to translate to the favorability we see in the back half. And there are a number of reasons that are driving that. The first one is just, to your point, the store payroll. We saw a lot of favorability in store payroll in the first half of the year. We had yet to cycle those operating model changes, which we did in Q1 the last year. So that will drive some favorability in the first half, but not in the back half. We also have a better sales outlook in the back half of the year, so we're adding sales to support that as well. In the first half, we also had the $40 million of geography change for offsetting SG&A versus cost of sales. That does not occur in the back half of this year. And then also in the first half of the year we saw medical claims costs come in much lower than we saw the year before. So that was a favorability in the first half of the year. So there's a noticeable change in SG&A trajectory as you go from the first half to back half of the year for those very reasons. And those are largely included in many cases in how we already guided. So…

Got it. Thanks very much. Have a great rest of back-to-school.

Thank you. And that is our last question. Thank you so much for taking the time to join us today and we look forward to speaking to you after Q3.

This will conclude Best Buy's second quarter fiscal 2025 earnings call. Thank you for your participation. You may now disconnect.