01—Abstract
Summary
Summary of the 10-K filed March 17, 2023. Cited figures are marked; the original filing is the authoritative source.
Best Buy Co., Inc. (NYSE: BBY) reported fiscal 2023 revenue of $46.3 billiona, down from $51.8 billion in fiscal 2022, with comparable sales declining 9.9%.
Operating income fell to $1.80 billionb from $3.04 billion, and diluted earnings per share were $6.29 versus $9.84 a year earlier. The filing attributes the decline to lapping pandemic-era demand and stimulus, a shift of consumer spending toward travel and entertainment, and macroeconomic pressure including high inflation. Gross profit rate fell to 21.4% of revenue from 22.5%, driven by lower product margins, increased promotions, and costs tied to the Best Buy Totaltech membership offering.
The Domestic segment generated $42.8 billionc of revenue (down 10.5%) and accounted for nearly all of the decline, while the International segment (Canada) fell to $3.5 billion. Online revenue was $14.2 billion, down 13.5% on a comparable basis. Management said it expects consumer electronics industry sales to decline again in fiscal 2024.
The company launched an enterprise-wide restructuring initiative in the second quarter, recording $147 milliond of restructuring charges in fiscal 2023. Financially, cash and cash equivalents declined to $1.87 billion, operating cash flow fell to $1.82 billion, and the company repurchased $1.0 billion of stock while paying $789 million in dividends. Management also noted a 5% quarterly dividend increase to $0.92 per share, a $5.0 billion repurchase authorization with $4.13 billion remaining, and a credit rating of BBB+ (S&P) and A3 (Moody's), both with stable outlooks.
02—Key points
Key Highlights
- Revenue declined to $46.3 billion from $51.8 billion, with comparable sales down 9.9%.
- Operating income fell to $1.80 billion from $3.04 billion; operating margin was 3.9% versus 5.9%.
- Diluted EPS was $6.29, compared with $9.84 in fiscal 2022; non-GAAP diluted EPS was $7.08 versus $10.01.
- Domestic online revenue was $14.2 billion, down 13.5% on a comparable basis.
- Restructuring charges of $147 million related to an enterprise-wide resource optimization initiative.
- Cash and cash equivalents fell to $1.87 billion; share repurchases totaled $1.0 billion and dividends $789 million in fiscal 2023.
- Quarterly dividend increased to $0.92 per share from $0.88, announced March 2, 2023.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Best Buy kept $0.03.
- Revenue$46.30B100.0%
- Cost of revenue−$36.39B78.6%
- Gross profit$9.91B21.4%
- Operating costs−$8.12B17.5%
- Operating income$1.79B3.9%
- Interest, other & tax−$376.0M0.8%
- Net income$1.42B3.1%
Where FY2023 revenue went
$46.30B- Cost of revenue: $36.39B, 79% of revenue
- SG&A: $7.97B, 17% of revenue
- Net income: $1.42B, 3.1% of revenue
- Interest, other & tax: $376.0M, 0.8% of revenue
Kept 3.1% as net incomeNet income $1.42B · 3.1%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed March 17, 2023Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $46.30B$51.76B | −10.6% |
| Cost of Revenue | $36.39B$40.12B | −9.3% |
| Gross Profit | $9.91B$11.64B | −14.8% |
| SG&A Expenses | $7.97B$8.63B | −7.7% |
| Operating Income | $1.79B$3.04B | −40.9% |
| Interest Expense | $35.00M$25.00M | +40.0% |
| Net Income | $1.42B$2.45B | −42.2% |
| EPS (Basic) | $6.31$9.94 | −36.5% |
| EPS (Diluted) | $6.29$9.84 | −36.1% |
| Shares Outstanding (Basic) | 224.80M246.80M | −8.9% |
| Shares Outstanding (Diluted) | 225.70M249.30M | −9.5% |
05—Questions
Frequently Asked Questions
Why did Best Buy's revenue and comparable sales decline in fiscal 2023?
The filing cites lapping strong pandemic-era sales from fiscal 2022 and 2021, which were boosted by stay-at-home purchases and government stimulus payments; a shift of consumer spending back to travel and entertainment; and macroeconomic pressures, including high inflation, that softened demand in consumer electronics.
What drove the decline in profitability?
The gross profit rate fell to 21.4% from 22.5%, mainly due to lower product margins from increased promotions, lower services margins tied to the Best Buy Totaltech membership offering, and higher supply chain costs. Decreased sales leverage on fixed expenses also pushed the SG&A rate up to 17.2% from 16.7%, partially offset by lower short-term incentive compensation.
What outlook did management provide for fiscal 2024?
Management said it is preparing for consumer electronics industry sales to decline again in fiscal 2024 due to macroeconomic headwinds. It expects capital expenditures of approximately $850 million and plans to close about 20 to 30 Best Buy stores while increasing Outlet Centers to approximately 30.
How is Best Buy managing its liquidity and shareholder returns?
The company had no borrowings under its $1.25 billion revolving credit facility and $1.25 billion of undrawn capacity at year-end. It repurchased $1.0 billion of stock in fiscal 2023 under a $5.0 billion authorization with $4.13 billion remaining, and it raised the quarterly dividend to $0.92 per share.
What is the status of the company's restructuring and strategic initiatives?
Best Buy recorded $147 million of restructuring charges in fiscal 2023 from an enterprise-wide initiative to align spending and optimize cost structure, mainly termination benefits. The company is also expanding its Best Buy Health business, with goodwill of $891 million assigned to that reporting unit.
06—Continue