Best Buy Co., Inc. (NYSE: BBY) today announced business updates related to the company’s second quarter ending July 30, 2022 (Q2 FY23) financial performance and fiscal 2023 outlook.
“As we’ve said, we entered the year expecting our fiscal 2023 financial results to be softer than last year as we lap government stimulus support and unusually strong consumer electronics industry demand while we continue to invest in our future,” said Corie Barry, Best Buy CEO. “As high inflation has continued and consumer sentiment has deteriorated, customer demand within the consumer electronics industry has softened even further, leading to Q2 financial results below the expectations we shared in May.”
The company expects Q2 FY23 comparable sales1 to decline approximately 13%, with revenue approximately 7.5% higher than pre-pandemic Q2 FY20. This compares to 19.6% comparable sales growth in Q2 FY22. The company expects its Q2 non-GAAP operating income rate2 to be in a range around 3.7%. Additionally, the company expects its Q2 ending inventory balance to be approximately flat to the same period last year.
“As the macro environment continues to evolve, we are proactively managing the day-to-day operations while maintaining our focus on our long-term strategy and growth initiatives,” said Barry. “While our financial results are not where we expected them to be this year, our sales continue to be higher than they were pre-pandemic. We remain a strong, profitable company with a unique position in an extremely innovative, vibrant industry that is more relevant than ever in the lives of consumers. We are confident in our team and our strategy and excited about the opportunities ahead.”
Matt Bilunas, Best Buy CFO, said, “As we contemplate the back half of the year, based on the ongoing uncertainty as it relates to macro-economic conditions and consumer electronics demand, it is difficult to assess the duration of the softer sales environment and the impact on our business. Our current planning assumptions for fiscal 2023 include a comparable sales1 decline in a range around 11% and a non-GAAP operating income rate2 of approximately 4%. This compares to our previous guidance of a comparable sales decline of 3% to 6% and a non-GAAP operating income rate of 5.2% to 5.4%. The primary drivers of our current non-GAAP operating income rate planning assumption compared to our previous guidance is SG&A expense deleverage on the reduced sales outlook, and, to a lesser degree, additional gross profit rate pressure from increased promotional activity in the consumer electronics industry.”
In response to the current sales environment, the company will continue to actively assess further actions to manage profitability. From a capital allocation perspective, the company remains committed to its quarterly dividend of $0.88 per share and has paused share repurchases at this time.
The company will provide additional business updates when it releases its Q2 FY23 results on August 30, 2022.
