Best Buy (NYSE:BBY) rallied after edging past consensus marks with its Q1 earnings beat and avoiding rattling investors with its guidance update.
The retailer reported domestic revenue fell 8.7% in Q1 to $9.89B primarily driven by a comparable sales decline of 8.5%. BBY saw comparable sales declines across almost all merchandise categories, with the largest drivers on a weighted basis being computing and home theater. The drops were anticipated as the Minneapolis-based company lapped a tough pandemic period.
Domestic online revenue plunged 14.9% to $3.06B decreased on a comparable basis to account for 30.9% of total domestic revenue vs. 33.2% a year ago.
Domestic gross profit rate fell to 21.9% of sales from 23.3% last year. The lower gross profit rate was primarily due to lower services margin rates, lower product margin rates off higher promotions and higher supply chain costs.
International revenue decreased 5.4% to $753M. The decrease was primarily driven by the exit of operations in Mexico in FY22 and a comparable sales decline of 1.4% in Canada.
Looking ahead, Best Buy (BBY) guided for FY23 revenue of $48.3B to $49.9B vs. $50.1B consensus and a prior view for $49.3B to $50.8B. BBY sees EPS of $8.40 to $9.00 for the year vs. $8.88 consensus and $8.85 to $9.15 prior view.
CEO update: "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."
Shares of Best Buy (BBY) gained 5.83% in premarket trading on Tuesday after the earnings beat.