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Best Buy (BBY) Earnings in Q1 2025
The retailer beat earnings per share and maintained its full-year forecast. Revenue is expected to range between $41.3 billion and $42.6 billion for the full year, which would mark a decline from the most recently ended fiscal year, when annual revenue totaled $43.45 billion. The company said comparable sales will range from flat to a 3% decline.
On an earnings call, CEO Corie Barry said Best Buy expects 2024 “to be a year of increasing industry stabilization,” echoing comments the company first made in February. She said the retailer expects sales trends to “improve sequentially” over the next three quarters.
But, she added, the retailer still faces many challenges, including persistent inflation, high mortgage rates and a hangover from excessive technology spending during the pandemic.
See how Best Buy made in its first fiscal quarter compared to what Wall Street was anticipating, based on an analyst survey conducted by LSEG:
- Earnings per share: $1.20 adjusted vs. $1.08 expected
- Revenue: $8.85 billion against expected US$8.96 billion
The company’s net income for the three months ended May 4 increased slightly to $246 million, or $1.13 per share, from $244 million, or $1.11 per share, a year before. Adjusting for extraordinary items including restructuring charges, Best Buy reported earnings of $1.20 per share.
Net sales fell to $8.85 billion from $9.47 billion in the same period a year ago.
Best Buy’s sales have been sluggish as the company deals with the fallout from about two years of unusually high sales during the Covid pandemic. The retailer is in the middle of a waiting game for the replacement cycle for laptops, kitchen appliances and more to normalize and for the debut of new tech gadgets to drive customers to its stores and website.
Barry said on the earnings call that the new devices will help increase excitement and sales. For example, she pointed to new Apple iPads It is Microsoft notebooks with the company’s integrated Copilot artificial intelligence tool. Additionally, she said, the company plans to hold a series of sales events from July through mid-September focusing on students and parents who are shopping for laptops and other back-to-school items.
Like other retailers, Best Buy has seen a pullback in discretionary purchases as consumers manage higher costs due to inflation.
Barry said customers continue to look for value and hesitate when it comes to more expensive purchases. She said the quarter was more promotional than expected in both the number of deals and the size of discounts, with especially high promotions in certain categories such as major appliances.
The company said it saw growth in its services and laptop categories.
Comparable sales, a metric that includes sales online and at stores open at least 14 months, decreased 6.1% compared to the same period a year ago. Chief Financial Officer Matt Bilunas said on the company’s earnings call that comparable sales fell 4.5% in February and were down 7% in March and April.
In the US, comparable sales fell 6.3% and online sales fell 6.1% year over year. Still, online sales accounted for nearly a third of total U.S. revenue in the quarter.
The company is pursuing newer businesses, including its subscription-based membership program. This relaunched My Best Buy as a three-tier program at the end of June. The lowest tier of the program is free, but the top tier costs $179.99 per year for perks including 24-hour technical support, up to two years of product protection, and 20% off repairs, among other benefits .
The Minneapolis-based retailer also reduced spending. Earlier this year, Barry said the company lay off workers and cut costs across the business. She did not specify the number of layoffs, but said Best Buy will invest in areas that can drive growth, such as artificial intelligence.
Best Buy said it spent $15 million on restructuring costs during the quarter, mostly related to severance or similar payments for employees who lost their jobs. It said it does not expect to have any other significant charges related to these layoffs, which began in the company’s fiscal fourth quarter.
As of early February, Best Buy had more than 85,000 employees. That represents a drop from nearly 125,000 workers at the start of 2020 and more than 90,000 employees at the start of 2023, according to the company’s financial records.
The company also said in late February that it would close 10 to 15 stores in the fiscal year, after closing 24 in the previous year.
Meanwhile, Barry said the company is updating the look and feel of stores across the chain. She said the “upgrades” are not as expensive as full store renovations, which allows the company to improve all locations rather than a limited number.
It is also leaning on suppliers as it reduces its workforce. For example, she said, Samsung is providing more experts in appliance departments at hundreds of Best Buy stores.
Best Buy on Thursday adjusted its full-year capital expenditure forecast to an estimate of $750 million, down from $800 million.