Best Buy Reports First Quarter Results

Best Buy Co., Inc. (NYSE: BBY) today announced results for the 13-week first quarter ended April 30, 2022 (“Q1 FY23”), as compared to the 13-week first quarter ended May 1, 2021 (“Q1 FY22”).
“I am incredibly proud of our teams’ ability to develop and execute plans to adapt to the changing environment over the past two years and to the more recent macro-economic conditions,” said Corie Barry, Best Buy CEO. “Even with the expected slowdown this year, we continue to be in a fundamentally stronger position than we were before the pandemic from both a revenue and operating income rate perspective. We are confident in the strength of our business and excited about what lies ahead. We have a unique value creation opportunity and are investing now, as we have successfully invested ahead of change in our past, to ensure we’re ready to meet the needs of our customers and employees and retain our unique position in our industry.”

Barry continued, “As we shared at our Investor Update in March, we expected our FY23 financial results to be softer than last year as we lap stimulus and other government support, the CE industry cycles the last two years of unusually strong demand, and we continue to invest in our future. In addition, we planned for increased promotional activity and higher supply chain expenses.”

“Therefore, the drivers of our Q1 financial results were largely as expected,” continued Barry. “Macro conditions worsened since we provided our guidance in early March which resulted in our sales being slightly lower than our expectations. Those trends have continued into Q2 and, as a result, we are revising our sales and profitability expectations for the year.”

Domestic revenue of $9.89 billion decreased 8.7% versus last year primarily driven by a comparable sales decline of 8.5%.

From a merchandising perspective, the company had comparable sales declines across almost all categories, with the largest drivers on a weighted basis being computing and home theater.

Domestic online revenue of $3.06 billion decreased 14.9% on a comparable basis, and as a percentage of total Domestic revenue, online revenue was 30.9% versus 33.2% last year.

Domestic gross profit rate was 21.9% versus 23.3% last year. The lower gross profit rate was primarily due to: (1) lower services margin rates, including pressure associated with the Best Buy Totaltech membership offering; (2) lower product margin rates, including increased promotions; and (3) higher supply chain costs. These pressures were partially offset by higher profit-sharing revenue from the company’s private label and co-branded credit card arrangement.

Domestic GAAP SG&A was $1.74 billion, or 17.6% of revenue, versus $1.84 billion, or 16.9% of revenue, last year.

International revenue of $753 million decreased 5.4% versus last year. This decrease was primarily driven by the exit of operations in Mexico in FY22 and a comparable sales decline of 1.4% in Canada.

International GAAP gross profit rate was 24.3% versus 23.7% last year.
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