01—Abstract
Summary
Summary of the 10-Q filed June 7, 2024. Cited figures are marked; the original filing is the authoritative source.
Best Buy Co., Inc. reported first-quarter fiscal 2025 results (quarter ended May 4, 2024) in this Form 10-Q filed June 7, 2024.
Revenue was $8.85 billiona, down from $9.47 billion a year earlier, and comparable sales declined 6.1%, which management attributed to a challenging consumer electronics environment marked by high inflation, increased spending outside the home, and lower levels of product innovation. Despite the sales decline, gross profit rose to $2.06 billion from $2.15 billion with a gross profit rate of 23.3% versus 22.7%, SG&A fell to $1.74 billion from $1.85 billion, and operating income was $312 million versus $311 million. Net earnings were $246 million and diluted EPS was $1.13, compared with $244 million and $1.11 a year earlier.
Non-GAAP diluted EPS was $1.20b versus $1.15. Cash flow improved markedly, with operating cash flow of $156 million compared with an outflow of $331 million in the prior-year quarter, driven mainly by inventory purchase and payment timing and volume. Cash and cash equivalents were $1.21 billion, and the company repurchased $52 million of stock and paid $202 million in dividends.
Management expects fiscal 2025 capital expenditures of approximately $750 millionc and total share repurchases of approximately $350 million, and it noted that the $5.0 billion repurchase authorization had $3.7 billion remaining at quarter end. The company also highlighted a restructuring initiative begun in the fourth quarter of fiscal 2024, with $16 million of charges this quarter, and expects to close approximately 10 to 15 domestic Best Buy stores in fiscal 2025. Domestic revenue fell 6.8% to $8.20 billion, with declines in appliances, home theater, gaming and mobile phones partially offset by growth in services and laptops.
The International segment's revenue fell 3.3% to $644 million and its operating income declined to $9 milliond from $21 million. Management expects fiscal 2025 to be a year of increasing industry stabilization as consumers begin to upgrade technology bought early in the pandemic, and it cited artificial intelligence-powered computing devices expected to launch in the summer.
02—Key points
Key Highlights
- Revenue of $8.85 billion declined from $9.47 billion, with comparable sales down 6.1% versus a 10.1% decline in the prior-year quarter.
- Net earnings rose to $246 million from $244 million; diluted EPS was $1.13 versus $1.11, and non-GAAP diluted EPS was $1.20 versus $1.15.
- Gross profit rate improved to 23.3% from 22.7%, while operating income was $312 million versus $311 million.
- Operating cash flow was $156 million, compared with a $331 million outflow a year earlier, primarily reflecting inventory and payment timing.
- The company expects fiscal 2025 capital expenditures of about $750 million and share repurchases of about $350 million; $3.7 billion remained under the $5.0 billion authorization.
- A fiscal 2024 enterprise-wide restructuring initiative recorded $16 million of charges this quarter, and the company does not expect material future charges from it.
- Total stores were 1,117 at quarter end, and the company expects to close approximately 10 to 15 domestic Best Buy stores in fiscal 2025.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, Best Buy kept $0.03.
- Revenue$8.85B100.0%
- Cost of revenue−$6.78B76.7%
- Gross profit$2.06B23.3%
- Operating costs−$1.75B19.8%
- Operating income$312.0M3.5%
- Interest, other & tax−$66.0M0.7%
- Net income$246.0M2.8%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed June 7, 2024Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $8.85B$9.47B | −6.5% |
| Cost of Revenue | $6.78B$7.32B | −7.3% |
| Gross Profit | $2.06B$2.15B | −4.0% |
| SG&A Expenses | $1.74B$1.85B | −6.0% |
| Operating Income | $312.00M$311.00M | +0.3% |
| Interest Expense | $12.00M$12.00M | 0.0% |
| Net Income | $246.00M$244.00M | +0.8% |
| EPS (Basic) | $1.14$1.11 | +2.7% |
| EPS (Diluted) | $1.13$1.11 | +1.8% |
| Shares Outstanding (Basic) | 216.20M218.90M | −1.2% |
| Shares Outstanding (Diluted) | 217.20M219.90M | −1.2% |
05—Questions
Frequently Asked Questions
Why did revenue decline even though profitability improved?
Revenue fell 6.5% to $8.85 billion, with comparable sales down 6.1%, driven by macroeconomic pressures such as high inflation and lower product innovation. Profitability improved because the gross profit rate rose to 23.3% from 22.7%, mainly from a favorable Domestic gross profit rate tied to services, including membership offerings, and SG&A declined to $1.74 billion from $1.85 billion.
What drove the improvement in operating cash flow?
Operating cash flow was $156 million versus an outflow of $331 million a year earlier. Management attributed the improvement mainly to the timing and volume of inventory purchases and payments, partially offset by the timing of vendor funding receivables and higher incentive compensation payments.
How is the company returning capital to shareholders?
In the quarter, Best Buy repurchased $52 million of common stock and paid $202 million in dividends at $0.94 per share. It expects about $350 million of total share repurchases in fiscal 2025 and had $3.7 billion remaining under its $5.0 billion authorization at quarter end.
Which areas drove the Domestic segment's sales decline?
Domestic revenue fell 6.8% to $8.20 billion, primarily due to comparable sales declines in appliances (18.5%), home theater, gaming and mobile phones. Services (up 9.0% comparable) and laptops partially offset these declines.
What does management expect for fiscal 2025?
Management expects fiscal 2025 to be a year of increasing industry stabilization as consumers begin to upgrade and replace technology bought early in the pandemic. It also cited computing devices powered by artificial intelligence expected to launch this summer, and it expects capital expenditures of about $750 million for the year.
06—Continue