Best Buy (NYSE:BBY) Misses Q1 Sales Targets

Kayode Omotosho /
2024/05/30 7:14 am EDT

Electronics retailer Best Buy (NYSE:BBY) fell short of analysts' expectations in Q1 CY2024, with revenue down 6.5% year on year to $8.85 billion. On the other hand, the company's outlook for the full year was close to analysts' estimates with revenue guided to $41.95 billion at the midpoint. It made a non-GAAP profit of $1.20 per share, improving from its profit of $1.15 per share in the same quarter last year.

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Best Buy (BBY) Q1 CY2024 Highlights:

  • Revenue: $8.85 billion vs analyst estimates of $8.97 billion (1.3% miss)
  • EPS (non-GAAP): $1.20 vs analyst estimates of $1.07 (11.8% beat)
  • The company reconfirmed its revenue guidance for the full year of $41.95 billion at the midpoint
  • Gross Margin (GAAP): 23.3%, up from 22.7% in the same quarter last year
  • Free Cash Flow of $4 million is up from -$535 million in the same quarter last year
  • Same-Store Sales fell 6.1% year on year
  • (-10.1% in the same quarter last year)
  • Market Capitalization: $15.56 billion

With humble beginnings as a stereo equipment seller, Best Buy (NYSE:BBY) now sells a broad selection of consumer electronics, appliances, and home office products.

Electronics & Gaming Retailer

After a long day, some of us want to just watch TV, play video games, listen to music, or scroll through our phones; electronics and gaming retailers sell the technology that makes this possible, plus more. Shoppers can find everything from surround-sound speakers to gaming controllers to home appliances in their stores. Competitive prices and helpful store associates that can talk through topics like the latest technology in gaming and installation keep customers coming back. This is a category that has moved rapidly online over the last few decades, so these electronics and gaming retailers have needed to be nimble and aggressive with their e-commerce and omnichannel investments.

Sales Growth

Best Buy is a behemoth in the consumer retail sector and benefits from economies of scale, an important advantage giving the business an edge in distribution and more negotiating power with suppliers.

As you can see below, the company's revenue was flat over the last five years as its store count and sales at existing, established stores both shrunk.

Best Buy Total Revenue

This quarter, Best Buy missed Wall Street's estimates and reported a rather uninspiring 6.5% year-on-year revenue decline, generating $8.85 billion in revenue. Looking ahead, Wall Street expects revenue to decline 1.6% over the next 12 months.

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Same-Store Sales

Same-store sales growth is an important metric that tracks demand for a retailer's established brick-and-mortar stores and e-commerce platform.

Best Buy's demand has been shrinking over the last eight quarters, and on average, its same-store sales have declined by 8.2% year on year. The company has been reducing its store count as fewer locations sometimes lead to higher same-store sales, but that hasn't been the case here.

Best Buy Year On Year Same Store Sales Growth

In the latest quarter, Best Buy's same-store sales fell 6.1% year on year. This decrease was a further deceleration from the 10.1% year-on-year decline it posted 12 months ago. We hope the business can get back on track.

Key Takeaways from Best Buy's Q1 Results

It was good to see Best Buy beat analysts' gross margin and EPS expectations this quarter. On the other hand, its revenue missed as its same-store sales fell by more than projected (a 6% drop vs an estimated 5% drop). Zooming out, we think this was still a decent, albeit mixed, quarter, showing that the company is staying on track. The stock is up 1.5% after reporting and currently trades at $72.99 per share.

So should you invest in Best Buy right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.