Best Buy lowered company guidance for the fiscal year as it announced that in the first quarter, comparable sales decreased in stores, but earnings did better than Wall Street expected.
Net earnings were $202 million, or 95 cents per diluted share, versus $246 million, or $1.13 per diluted share, in the year-previous quarter. Adjusted for one-time events, earnings per diluted share were $1.15 versus $1.20 in the year-before period, the company reported.
A Zacks Investment Research consensus analyst estimate forecast earnings of $1.09 per adjusted diluted share on revenues of $8.77 billion.
Overall and domestic comparable sales decreased 0.7%. Domestic online comps increased 2.1%.
Revenue was $8.77 billion versus $8.85 billion in the year-earlier quarter. Domestic revenue was $8.13 billion versus $8.2 billion in the year-past period.
Operating income was $219 million versus $312 million in the year-prior period, while adjusted operating income came in at $333 million, flat year over year.
From a merchandising perspective, Kohl’s indicated that the biggest drivers of the comparable sales decline on a weighted basis were home theater, appliances and drones, partially offset by gains in the computing, mobile phone and tablet.
In announcing the first quarter results, Corie Barry, Best Buy CEO, said, “I’m proud of how our teams have been navigating the environment and planning our business within dynamic macroeconomic conditions. Against this backdrop, we executed well in Q1 and delivered in-line revenue and better-than-expected adjusted operating income.”
Barry stated that the company remains focused on its strategic priorities: driving omni-channel experience improvements that resonate with customers, launching and scaling incremental profit streams, including Best Buy Marketplace and Best Buy Ads, and boosting operational effectiveness and efficiency to fund strategic investments and offset pressures on the business.
“Today, we are updating our full year guidance to incorporate the impact of tariffs,” said Matt Bilunas, Best Buy CFO. “We expect annual comparable sales growth to be in the range of down 1% to up 1%, and our adjusted operating income rate to be similar to last year at approximately 4.2%. Our underlying working assumptions are that tariffs stay at the current levels for the rest of the year, and there is no material change in consumer behavior from the trends we have seen in recent quarters. As you can imagine, and based on our history, we will continue to scenario-plan and adjust with agility as the situation evolves.”
Best Buy updated guidance for the fiscal year includes revenue of $41.1 billion to $41.9 billion, which compares to prior guidance of $41.4 billion to $42.2 billion, and comparable sales down 1% to up 1%, which compares to prior guidance of 0.0% to up 2%. In addition, Best Buy sees adjusted diluted earnings per share as coming in at $6.15 to $6.30 versus the $6.20 to $6.60 it previously forecast.
