As it faces tough year-over-year comparisons, Best Buy Co. has released a financial performance update related to the company’s fiscal 2023 second quarter ended July 30 and its fiscal 2023 outlook.
The company expects second-quarter comparable sales to decline about 13% versus the year-earlier period. It anticipates revenue to come in 7.5% higher than the pre-pandemic fiscal 2020 quarter. The 2023 comparable sales figure compares to a 19.6% comp in the year-earlier period. Best Buy expects its non-GAAP operating income rate to be up around 3.7% in the second quarter year over year. In addition, the company expects its second-quarter-ending inventory balance to be approximately flat to the same period a year prior.
In announcing the outlook, Matt Bilunas, Best Buy CFO, said, “As we contemplate the back half of the year, based on the ongoing uncertainty as it relates to macroeconomic conditions and consumer electronics demand, it is difficult to assess the duration of the softer sales environment and the impact on our business. Our current planning assumptions for fiscal 2023 include a comparable sales decline in a range around 11% and a non-GAAP operating income rate of approximately 4%. This compares to our previous guidance of a comparable sales decline of 3% to 6% and a non-GAAP operating income rate of 5.2% to 5.4%. The primary drivers of our current non-GAAP operating income rate planning assumption compared to our previous guidance is SG&A expense deleverage on the reduced sales outlook, and, to a lesser degree, additional gross profit rate pressure from increased promotional activity in the consumer electronics industry.”
In response to sales conditions, Best Buy reported it would continue to actively assess further actions to manage profitability. From a capital allocation perspective, the company remains committed to its quarterly dividend of 88 cents per share and has paused share repurchases.
Corie Barry, Best Buy CEO, said. “As we’ve said, we entered the year expecting our fiscal 2023 financial results to be softer than last year as we lap government stimulus support and unusually strong consumer electronics industry demand while we continue to invest in our future. As high inflation has continued and consumer sentiment has deteriorated, customer demand within the consumer electronics industry has softened even further, leading to Q2 financial results below the expectations we shared in May. As the macro environment continues to evolve, we are proactively managing the day-to-day operations while maintaining our focus on our long-term strategy and growth initiatives. While our financial results are not where we expected them to be this year, our sales continue to be higher than they were pre-pandemic.”