01—Abstract
Summary
Summary of the 10-K filed March 18, 2022. Cited figures are marked; the original filing is the authoritative source.
Best Buy Co., Inc. (BBY) reported record fiscal 2022 results, with revenue of $51.76 billiona, up from $47.26 billion in fiscal 2021, and comparable sales growth of 10.4%.
Net earnings rose to $2.45 billionb from $1.80 billion, and diluted earnings per share were $9.84, compared with $6.84 a year earlier. Operating income was $3.04 billion, or 5.9% of revenue. The Domestic segment drove most of the growth, with revenue of $47.83 billion and comparable sales up 11.0%.
The International segment (Canada, after the exit from Mexico) reported revenue of $3.93 billionc and operating income of $244 million, versus $43 million the prior year. Online revenue in the Domestic segment fell 12.0% on a comparable basis to $16.4 billion, as shoppers shifted back to stores. Cash flow and capital return shifted during the year.
Operating cash flow fell to $3.25 billiond from $4.93 billion, mainly due to inventory purchase timing. Cash and cash equivalents declined to $2.94 billion from $5.49 billion. The company repurchased 32.2 million shares for $3.5 billion and paid $688 million in dividends.
It also completed the acquisitions of Current Health Ltd. ($389 million net cash) and Two Peaks, LLC (Yardbird, $79 million). Management announced a new $5.0 billion share repurchase authorization, plans to spend about $1.5 billion on repurchases in fiscal 2023, and a 26% increase in the quarterly dividend to $0.88 per share. Management also flagged risks tied to the Totaltech membership rollout, which pressures near-term services margins, and to macroeconomic conditions, supply chain costs, and the conflict in Ukraine.
Balance sheet capacity remains solid. Long-term debt is $1.22 billion, with no borrowings under the $1.25 billion revolving credit facility as of January 29, 2022.
Credit ratings are BBB+ (S&P) and A3 (Moody's), both with stable outlooks. Management expects to raise capital expenditures to at least $1 billion annually over the next three fiscal years.
02—Key points
Key Highlights
- Revenue rose to $51.76 billion in fiscal 2022 from $47.26 billion, with comparable sales up 10.4%.
- Diluted EPS was $9.84, up from $6.84; net earnings were $2.45 billion versus $1.80 billion.
- Operating income was $3.04 billion (5.9% of revenue), up from $2.39 billion (5.1%).
- Domestic online revenue was $16.4 billion, down 12.0% on a comparable basis, as shopping shifted back toward stores.
- Operating cash flow fell to $3.25 billion from $4.93 billion, and cash and equivalents dropped to $2.94 billion from $5.49 billion.
- The company repurchased $3.5 billion of stock and announced a new $5.0 billion authorization, with about $1.5 billion planned for fiscal 2023; the quarterly dividend rises to $0.88 from $0.70.
- Totaltech membership launch pressures near-term services margins, and the company is raising capex to at least $1 billion annually.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Best Buy kept $0.05.
- Revenue$51.76B100.0%
- Cost of revenue−$40.12B77.5%
- Gross profit$11.64B22.5%
- Operating costs−$8.60B16.6%
- Operating income$3.04B5.9%
- Interest, other & tax−$585.0M1.1%
- Net income$2.45B4.7%
Where FY2022 revenue went
$51.76B- Cost of revenue: $40.12B, 78% of revenue
- SG&A: $8.63B, 17% of revenue
- Net income: $2.45B, 4.7% of revenue
- Interest, other & tax: $585.0M, 1.1% of revenue
Kept 4.7% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed March 18, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $51.76B$47.26B | +9.5% |
| Cost of Revenue | $40.12B$36.69B | +9.4% |
| Gross Profit | $11.64B$10.57B | +10.1% |
| SG&A Expenses | $8.63B$7.93B | +8.9% |
| Operating Income | $3.04B$2.39B | +27.1% |
| Interest Expense | $25.00M$52.00M | −51.9% |
| Net Income | $2.45B$1.80B | +36.5% |
| EPS (Basic) | $9.94$6.93 | +43.4% |
| EPS (Diluted) | $9.84$6.84 | +43.9% |
| Shares Outstanding (Basic) | 246.80M259.60M | −4.9% |
| Shares Outstanding (Diluted) | 249.30M263.00M | −5.2% |
05—Questions
Frequently Asked Questions
How did Best Buy perform financially in fiscal 2022?
Revenue reached $51.76 billion, up from $47.26 billion, and comparable sales rose 10.4%. Net earnings were $2.45 billion, and diluted EPS was $9.84, compared with $6.84 in fiscal 2021. Operating income was $3.04 billion, or 5.9% of revenue.
What drove the growth in the Domestic and International segments?
The Domestic segment generated $47.83 billion in revenue, up 10.5%, with comparable sales up 11.0%, led by Computing and Mobile Phones, Consumer Electronics and Appliances. The International segment's revenue fell 1.0% to $3.93 billion because of the Mexico exit, but its operating income rose to $244 million from $43 million, with gross profit improving in Canada.
How much cash did Best Buy return to shareholders, and what are its plans?
Best Buy repurchased and retired 32.2 million shares for $3.5 billion and paid $688 million in dividends. On February 28, 2022, the Board approved a new $5.0 billion repurchase authorization, and the company plans to spend about $1.5 billion on repurchases in fiscal 2023. The quarterly dividend will increase to $0.88 per share from $0.70.
What are the main risks flagged in the filing?
The filing cites the continuing COVID-19 pandemic, macroeconomic pressure on consumer spending, supply chain and transportation costs, and reliance on key vendors and mobile carriers. It also notes competitive pressure, cybersecurity exposure, and the Totaltech membership offering, which pressures near-term services margins. The conflict in Ukraine and trade tensions with China and Taiwan are also identified as risks to product costs and supply.
How strong is Best Buy's balance sheet and liquidity?
Long-term debt was $1.22 billion as of January 29, 2022, and there were no borrowings under the $1.25 billion five-year revolving credit facility. Standard & Poor's rates the company BBB+ (Stable), and Moody's rates it A3 (Stable). Cash and cash equivalents were $2.94 billion, and restricted cash rose to $269 million. The current ratio declined to 1.0 from 1.2.
06—Continue