Best Buy (BBY) earnings Q1 2024
Best Buy beats earnings expectations, but sales fall short
On Thursday, Best Buy, the American consumer electronics retailer, reported an earning per share of $1.15 adjusted, which beat Wall Street’s estimate of $1.11. However, net sales for the first quarter fell to $9.47 billion, down 11% from $10.65 billion in the year-ago period, and fell short of Wall Street’s expectations of $9.52 billion. Comparable sales declined 10.1% in the quarter, in line with the drop expected by investors.
Despite the missed sales expectations, shares in Best Buy rose more than 2% in early trading on Thursday. The company affirmed the outlook it shared in March and expects full-year revenue of between $43.8 billion and $45.2 billion, a decline from its most recent fiscal year, and a comparable sales decline of between 3% and 6%.
Best Buy CEO, Corie Barry, said on a call with analysts that as shoppers face higher prices of housing, food, and fuel, they are making tradeoffs by buying some items and skipping others. “We’ve been seeing a consumer who is – whether or not you call it a recession – exhibiting some recessionary behaviors,” she said.
However, Barry said Best Buy expects the calendar year to be “the bottom for the decline in tech demand.” She said sales will bounce back because households now have far more connected devices than pre-pandemic. The debut of innovative products and the aging of items that customers have at home will spark replacements or new purchases, too, she said.
Best Buy has looked for other ways to make money when people aren’t buying as many TVs, smartphones or home theater systems. Earlier this year, it struck a deal with Atrium Health, a North Carolina-based health-care system, to sell devices and handle installation for a program that allows patients to get hospital care at home. It recently relaunched its membership program, My Best Buy, which charges a subscription fee and includes features like tech support, extended returns, and early access to hot products.
FAQs:
What is Best Buy’s full-year revenue expectation?
Best Buy expects full-year revenue of between $43.8 billion and $45.2 billion, a decline from its most recent fiscal year, and a comparable sales decline of between 3% and 6%.
Why did Best Buy’s net sales for the first quarter fall short of Wall Street’s expectations?
Best Buy’s net sales for the first quarter fell short of Wall Street’s expectations due to weaker spending on consumer electronics this year.
Does Best Buy expect sales to bounce back?
Yes, Best Buy expects sales to bounce back because households now have far more connected devices than pre-pandemic. The debut of innovative products and the aging of items that customers have at home will spark replacements or new purchases.
What are some of the ways Best Buy has looked to make money in addition to selling electronics?
Best Buy struck a deal with Atrium Health, a North Carolina-based health-care system, to sell devices and handle installation for a program that allows patients to get hospital care at home. It also recently relaunched its membership program, My Best Buy, which charges a subscription fee and includes features like tech support, extended returns, and early access to hot products.
Has Best Buy made changes to its workforce?
Yes, Best Buy laid off hundreds of store employees in April, but the retailer declined to specify the number. It intends to add workers in growing areas such as its membership program and health business.
First Quarter 2024 Earnings Report for Best Buy (BBY)
Best Buy beat Wall Street’s earnings expectations for the quarter but missed sales estimates and reiterated its forecast for weaker spending on consumer electronics this year. Despite this news, shares rose more than 2% in early trading on Thursday. The retailer affirmed its outlook from March, expecting full-year revenue between $43.8 billion and $45.2 billion, a decline from its most recent fiscal year, and a comparable sales decline of between 3% and 6%. CEO Corie Barry stated that as shoppers face higher prices of housing, food, and fuel, they are making tradeoffs by buying some items and skipping others, exhibiting some recessionary behaviors. However, Best Buy still expects the current year to be “the bottom for the decline in tech demand,” saying sales will bounce back because households now have far more connected devices than pre-pandemic. Best Buy’s net income in the first quarter fell to $244 million, or $1.11 per share, from $341 million, or $1.49 per share, a year earlier. Net sales in the quarter declined to $9.47 billion, down 11% from $10.65 billion in the year-ago period, and fell short of Wall Street’s expectations. Comparable sales declined 10.1% in the quarter, in line with the drop expected by investors. Best Buy has been more vulnerable to pullback since many of the items it sells have a higher price tag and are not replaced frequently. Best Buy is the latest retailer to offer updated insight into the American consumer. Other retailers, such as Walmart, Target, and Home Depot, have spoken about customers’ unwillingness to spend on big-ticket items due to high inflation and low consumer confidence. As a result of this trend, Best Buy has looked for other ways to make money when people aren’t buying as many electronics. Earlier this year, it announced a deal with North Carolina-based healthcare system Atrium Health to sell devices and handle installations for a program that allows patients to receive healthcare services at home. It also relaunched its membership program, My Best Buy, which includes features such as tech support, extended returns, and early access to hot products. The company recently laid off hundreds of its store employees in April, but it expects to add workers in growing areas such as its membership program and healthcare business. As of the end of January, Best Buy had more than 90,000 employees in the US and Canada. Shares of Best Buy closed Wednesday at $69.15, bringing the company’s market value to $15.12 billion. So far this year, the stock is down about 14%, trailing behind the 7% gains of the S&P 500 and the 2% declines of the retail-focused XRT during the same period.