01—Abstract
Summary
Summary of the 10-Q filed December 6, 2024. Cited figures are marked; the original filing is the authoritative source.
Best Buy Co., Inc. reported its third quarter of fiscal 2025 (quarter ended November 2, 2024) in this Form 10-Q.
Revenue was $9.45 billiona, down from $9.76 billion a year earlier, and comparable sales declined 2.9%. Net earnings rose to $273 million from $263 million, and diluted EPS was $1.26 versus $1.21. Operating income was $350 million compared with $354 million, and the company stated that revenue declines were offset by stronger profitability management.
For the first nine months, revenue was $27.58 billionb, comparable sales fell 3.7%, and net earnings were $810 million versus $781 million. Gross profit rate rose to 23.4% from 22.9%, primarily from the Domestic services category, including membership offerings. Cash flow and liquidity shifted notably.
Operating cash flow was $561 millionc for the first nine months, up from $290 million, driven mainly by the timing of inventory purchases and payments. Merchandise inventories rose to $7.81 billion from $4.96 billion at fiscal year-end, while accounts payable increased to $7.15 billion. Cash and cash equivalents fell to $643 million from $1.45 billion at February 3, 2024.
Shareholder returns continued, with $607 milliond in dividends paid and $285 million in share repurchases over nine months, and the company expects total repurchases of up to $500 million in fiscal 2025. Remaining authorization under the $5.0 billion program was $3.5 billion. Management highlighted soft demand in a challenged consumer electronics industry.
Comparable sales declined in appliances, home theater and gaming, while computing, tablet and services grew. Management said it expects capital expenditures of approximately $750 million for fiscal 2025, down from $795 million in fiscal 2024. The filing also notes that the company will continue to pursue cost efficiencies and that it does not expect material future restructuring charges from its fiscal 2024 initiative.
02—Key points
Key Highlights
- Third-quarter revenue of $9.45 billion declined from $9.76 billion, with comparable sales down 2.9%; nine-month revenue was $27.58 billion, with comparable sales down 3.7%.
- Third-quarter net earnings increased to $273 million ($1.26 diluted EPS) from $263 million ($1.21 diluted EPS); nine-month diluted EPS was $3.73 versus $3.57.
- Gross profit as a percentage of revenue rose to 23.5% in the third quarter from 22.9%, driven by the Domestic services category, including membership offerings.
- Inventory increased to $7.81 billion from $4.96 billion at February 3, 2024, while accounts payable rose to $7.15 billion, and cash and cash equivalents declined to $643 million.
- Operating cash flow for the first nine months was $561 million, up from $290 million, primarily due to the timing and volume of inventory purchases and payments.
- The company paid $607 million in dividends and repurchased $285 million of stock in the first nine months; it expects up to $500 million in repurchases for fiscal 2025, with $3.5 billion remaining under its $5.0 billion authorization.
- Non-GAAP diluted EPS was $1.26 in the third quarter, down from $1.29, while nine-month non-GAAP diluted EPS rose to $3.80 from $3.66.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2025, Best Buy kept $0.03.
- Revenue$9.45B100.0%
- Cost of revenue−$7.23B76.5%
- Gross profit$2.22B23.5%
- Operating costs−$1.87B19.8%
- Operating income$350.0M3.7%
- Interest, other & tax−$77.0M0.8%
- Net income$273.0M2.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed December 6, 2024Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $9.45B$9.76B | −3.2% |
| Cost of Revenue | $7.23B$7.52B | −3.9% |
| Gross Profit | $2.22B$2.23B | −0.7% |
| SG&A Expenses | $1.87B$1.88B | −0.4% |
| Operating Income | $350.00M$354.00M | −1.1% |
| Interest Expense | $13.00M$14.00M | −7.1% |
| Net Income | $273.00M$263.00M | +3.8% |
| EPS (Basic) | $1.27$1.21 | +5.0% |
| EPS (Diluted) | $1.26$1.21 | +4.1% |
| Shares Outstanding (Basic) | 214.80M217.80M | −1.4% |
| Shares Outstanding (Diluted) | 216.70M218.30M | −0.7% |
05—Questions
Frequently Asked Questions
Why did revenue decline while earnings increased?
Revenue decreased 3.2% in the third quarter, driven by comparable sales declines in appliances, home theater and gaming. Earnings improved because the gross profit rate increased to 23.5% in the Domestic segment, largely from higher-margin services, including membership offerings, and from lower employee compensation and intangible amortization within SG&A. Operating income, however, was roughly flat at $350 million versus $354 million.
What drove the large increase in inventory and accounts payable?
Merchandise inventories rose to $7.81 billion from $4.96 billion at February 3, 2024, and accounts payable rose to $7.15 billion from $4.64 billion. The filing attributes the change in operating cash flow primarily to the timing and volume of inventory purchases and payments. Supply chain financing liabilities within accounts payable were $793 million as of November 2, 2024.
How is Best Buy returning capital to shareholders?
In the first nine months, Best Buy paid $607 million in dividends at a regular quarterly rate of $0.94 per share and repurchased $285 million of common stock, or 3.2 million shares. The company expects total share repurchases of up to $500 million in fiscal 2025, and $3.5 billion remained available under its $5.0 billion authorization as of November 2, 2024.
How is the company's liquidity position?
Cash and cash equivalents were $643 million at November 2, 2024, down from $1.45 billion at February 3, 2024. The company has a $1.25 billion five-year revolving credit facility with no borrowings outstanding. Restricted cash was $295 million, primarily held to cover product protection plans under membership offerings and self-insurance liabilities.
What is management's outlook on capital spending and the business?
Management expects fiscal 2025 capital expenditures to approximate $750 million, compared with $795 million in fiscal 2024. It described the consumer electronics industry as uncertain and said it is focused on customer experiences, operational efficiency, disciplined capital allocation and new revenue streams, with the holiday season as a key period.
06—Continue