Best Buy is maintaining its full-year forecasts after reporting its first quarter fiscal year 2024 sales were down 10.1% due to ‘cautious’ consumer spending in the face of inflation and low consumer confidence. For quarter ended on April 29, 2023, total Best Buy sales were $9.467 billion, down 10.1% from $10.647 billion in last year’s Q1. In the U.S., sales were $8.8 billion, down 11% from $9.8 billion.
However, in yet another signal to integrators that recurring monthly revenue (RMR) is a key to growth and stability, revenue from Best Buy’s services segment, which includes its Totaltech remote support program, grew by 12% in the U.S. Services now represent 6% of domestic revenue. Totaltech support is $199 per year and offers customers Geek Squad tech support, available 24/7/365 on all the technology in the home, no matter where it was purchased. Customers also get 10% off on custom installation services.
For its Q1 20-24, Best Buy says gaming equipment sales also grew slightly. From a merchandising perspective, the largest drivers of the company’s comparable sales decline were computing, appliances, home theater and mobile phones.
“Customers are clearly feeling cautious and making tradeoff decisions as they continue to deal with high inflation and low consumer confidence.”Corie Barry, CEO, Best Buy
While the quarterly data may not look strong, Best Buy’s revenues were actually better than many analysts had predicted, given weak retail sales reported recently by both Home Depot and Target. The company is maintaining its full year forecast of a sales decline between 6% and 8%. As a result, Best Buy (Nasdaq: BBY) stock ended the day up 3% on the news.
“Today we are reporting Q1 sales results that are right in line with the expectations we shared in March and profitability that was better than expected, demonstrating our strong operational execution,” said Corie Barry, Best Buy CEO. “We continue to appropriately balance the need to adjust in response to the current industry sales trends with the need to invest so we can capitalize on opportunities as our industry moves through this downturn and returns to growth.”
“In this environment, customers are clearly feeling cautious and making tradeoff decisions as they continue to deal with high inflation and low consumer confidence due to a number of factors,” continued Barry. “At the same time, in the first quarter, we continued to see our purchasing customer behavior remain relatively consistent in terms of demographics and the percentage of purchases categorized as premium. In addition, our focus on being there for our customers with expertise and support was highlighted by material improvements in customer satisfaction scores for our in-home services and delivery, and record scores in remote support, in-home repair, store care, and Best Buy Totaltech call center experiences – all key differentiators for us.”
Best Buy Maintains Full-Year Financial Guidance
“Our sales performance in the first quarter aligned with our expectations and we are maintaining the full year guidance we provided this past March,” said Matt Bilunas, Best Buy CFO. “As a reminder, our guidance assumed the consumer electronics industry would continue to feel the pressure of the broader macro environment and a high degree of uncertainty as it relates to the consumer.”
“As we enter the second quarter, we expect our comparable sales to decline in the range of 6% to 8% and our non-GAAP operating income rate to be approximately 3% or slightly higher,” Bilunas continued. “Given the current environment, we are of course preparing for a number of scenarios within our annual guidance range. At this point, we believe our sales align closer to the midpoint of the annual comparable sales guidance. It is still early in the year, so we will continue to watch the trends closely and adjust as necessary.”
For the year, Best Buy anticipates revenues of $43.8 billion to $45.2 billion.
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