Best Buy (BBY.US) Q1 Profit Beats Expectations Expect Electronics Sales to Slow This Year Provider Zhitong Finance

Zhitong Finance APP learned that Best Buy (BBY.US) announced its financial report for the first quarter of fiscal year 2024 before the U.S. stock market opened on May 25 (Thursday). Among them, the company’s Q1 profit exceeded Wall Street’s expectations, but sales fell short of expectations, and it reiterated its forecast for weak consumer electronics spending this year.

The financial report shows that Best Buy’s Q1 revenue was US$9.47 billion, compared with US$10.65 billion in the same period last year, and the market expected US$9.52 billion; net profit fell from US$341 million in the same period last year to US$244 million; diluted earnings per share were 1.11 U.S. dollars, compared with $1.49 a year ago, adjusted earnings per share were $1.15, compared with consensus estimates of $1.11.

Same-store sales fell 10.1%, in line with market expectations, compared with a decline of 8.0% in the same period last year.

Looking ahead, the retailer reiterated its fiscal 2024 full-year performance guidance, expecting full-year revenue to be between $43.8 billion and $45.2 billion, with same-store sales down 3% to 6%. On a non-GAAP basis, operating margin was 3.7% to 4.1%, and diluted earnings per share were $5.70 to $6.50. Capital expenditures are expected to be approximately $850 million.

Chief Executive Corie Barry said the composition of Best Buy’s customers and the proportion of high-end products they buy have not changed.

However, she added, “In this environment, consumers are clearly feeling cautious and making trade-off decisions as they continue to grapple with high inflation and declining consumer confidence due to a number of factors”.

As of now, Best Buy is the latest retailer to provide an update on what’s going on with U.S. consumers. It is understood that in the past week, many retailers including Wal-Mart (WMT.US), Target (TGT.US) and Home Depot (HD.US) have talked about the reluctance of more price-conscious Spending on big-ticket or discretionary items, especially compared to previous years, which were boosted by stimulus during the pandemic.

As a consumer electronics retailer, Best Buy is more vulnerable to this pullback in consumer sentiment because many of the items it sells carry higher price tags and aren’t replaced very often.

Still, the company has been looking for other ways to make money at a time when people are buying fewer TVs, smartphones or home theater systems. Earlier this year, the company struck a deal with Atrium Health, a North Carolina-based health care system, under which Atrium will buy equipment from Best Buy and have it installed by Best Buy’s team of geeks. Most recently, Best Buy also relaunched its “My Best Buy” membership program, which charges a subscription fee and includes features like tech support, extended return periods and early access to popular products.

Best Buy also laid off hundreds of store workers in April. The retailer declined to disclose the number of layoffs, but said it would add staff in growth areas such as loyalty programs and wellness.

The company’s workforce has been shrinking over the years. Best Buy had more than 90,000 employees in the U.S. and Canada at the end of January, down from nearly 125,000 in early 2020.

Shares of Best Buy closed at $69.15 on Wednesday, giving it a market capitalization of $15.12 billion. The stock is down about 14% so far this year, lagging the S&P 500’s 7% gain and retail index ETF-SPDR S&P (XRT.US )’s 2% decline over the same period. After the financial report was announced, the stock rose more than 4% as of the pre-market in the US stock market.