MINNEAPOLIS - Best Buy Co., Inc. (NYSE: NYSE:BBY) today reported a stronger-than-expected performance for the first quarter ended May 4, 2024, with adjusted earnings per share (EPS) surpassing analyst projections. The company's stock price responded positively to the news, jumping 11.7%.
The consumer electronics retailer announced an adjusted EPS of $1.20, outperforming the analyst estimate of $1.08. Despite the earnings beat, revenue fell short of expectations, coming in at $8.85 billion against the consensus estimate of $8.97 billion.
Best Buy's CEO, Corie Barry, attributed the solid profitability to effective management, which helped the company navigate a challenging sales environment marked by a 6.1% decline in comparable sales. Barry highlighted the company's progress on its FY25 priorities, growth in its paid membership base, and improvements in customer experiences as key factors in its performance.
Revenue for the quarter saw a decrease of 6.8% compared to the same period last year, primarily due to a 6.3% drop in comparable sales. However, the company's gross profit rate improved, driven by a better financial performance in the services category, including membership offerings.
Looking ahead, Best Buy forecasts FY2025 EPS to be in the range of $5.75 to $6.20, with the midpoint of this guidance at $5.975, slightly below the analyst consensus of $6.03. The company's revenue guidance for FY2025 is set between $41.3 billion and $42.6 billion, with the midpoint at $41.95 billion, just below the consensus of $42 billion.
CFO Matt Bilunas expressed confidence in the company's ability to deliver high-end profitability, even at the midpoint of the comparable sales guidance, due to a higher gross profit rate in membership and services offerings. For the second quarter of FY2025, Best Buy anticipates a 3% decline in comparable sales and a non-GAAP operating income rate of approximately 3.5%.
Following the announcement, JPMorgan (NYSE:JPM) said, "Overall, 1Q beat Street on margins as we previewed, with comps at the lower end of expectations. 2Q and the FY are pretty much in line with the Street. As discussed, bears are looking for a weak QTD trend while BBY noted in the press release it continues to expect comps to improve over the year, but more likely reaching the midpoint of the FY guide."