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May 31, 2024

Best Buy Overcomes Promotional Pressure To Beat Street on Earnings

Posted In: Retail Articles
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By: Mike Duff

Contributing Editor

Sales were tougher to come by at Best Buy, but the retailer managed to improve earnings significantly in the first quarter.

Net earnings were $246 million, or $1.13 per diluted share, versus $244 million, or $1.11 per diluted share in the year-earlier quarter. Adjusted for one-time events, diluted earnings per share were $1.20 versus $1.15 in the period a year prior.

Best Buy beat a Yahoo Finance analyst consensus estimate earnings estimate of $1.08 per adjusted diluted share but fell short of a $8.96 billion revenue forecast.

Comparable sales were down 6.1%, with domestic comps down 6.3% year over year, the company noted.

Revenues were $8.85 billion versus $9.47 billion in the year-previous quarter, while domestic revenues came in at $8.2 billion versus $8.8 billion. Operating income was $312 million versus $311 million in the year-before period, while adjusted operating income came in at $333 million versus 322 million.

Corie Barry, Best Buy CEO, said in a conference call that the company’s customers remain extremely deal-focused and are attracted to more predictable sales periods. Best Buy’s first-quarter product margins remained relatively stable, Barry said, even though the environment overall was more promotional in breadth and depth than the company expected. The degree of promotion as experienced in the first quarter varied by category. The major appliances category, for example, was more promotional in the period as retailers tried to stimulate interest and sales, Barry noted.

In announcing the financial results, Barry said, “Today, we are reporting better-than-expected Q1 profitability. Through strong execution, we continued to manage our profitability while at the same time preparing for future growth. We made progress on our FY25 priorities, grew our paid membership base and drove improvements in our customer experiences. The mix of macro factors continued to create a challenging sales environment for our category during the quarter and our sales were slightly softer than our expectations. We will continue to navigate the environment while remaining focused and energized about our purpose to enrich lives through technology. There is exciting new innovation ahead, and we intend to strengthen our position in key categories like computing, home theater and major appliances through our differentiated experiences, pointed marketing spend and competitive pricing.”

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