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.
Notes:
(1) The method of calculating comparable sales varies across the
retail industry. As a result, our method of calculating comparable
sales may not be the same as other retailers’ methods. For
additional information on comparable sales, please see our most
recent Annual Report on Form 10-K, and our subsequent Quarterly
Reports on Form 10-Q, filed with the Securities and Exchange
Commission, and available at www.investors.bestbuy.com.
(2) A reconciliation of the projected non-GAAP operating income
rate, which is a forward-looking non-GAAP financial measure, to the
most directly comparable GAAP financial measure, is not provided
because the company is unable to provide such reconciliation
without unreasonable effort. The inability to provide a
reconciliation is due to the uncertainty and inherent difficulty
predicting the occurrence, the financial impact and the periods in
which the non-GAAP adjustments may be recognized. The most directly
comparable GAAP measure may include the impact of such items as
restructuring charges; price-fixing settlements; goodwill
impairments; gains and losses on investments; intangible asset
amortization; certain acquisition-related costs; and the tax effect
of all such items. Historically, the company has excluded these
items from non-GAAP financial measures. The company currently
expects to continue to exclude these items in future disclosures of
non-GAAP financial measures and may also exclude other items that
may arise (collectively, “non-GAAP adjustments”). The decisions and
events that typically lead to the recognition of non-GAAP
adjustments, such as a decision to exit part of the business or
reaching settlement of a legal dispute, are inherently
unpredictable as to if or when they may occur. For the same
reasons, the company is unable to address the probable significance
of the unavailable information, which could be material to future
results.
Estimated Results for Fiscal 2023 and Q2 FY23
The expected financial results included in this press release
reflect management’s current estimates. It has provided estimates
for these metrics but has not yet completed the closing procedures
for the quarter and its independent registered public accounting
firm has not yet reviewed the financial statements for this period
or the estimates in this press release. Accordingly, the expected
results for this period reflect management’s current estimates and
are subject to change pending finalization, and actual results
could differ materially as the company finalizes such results.
Forward-Looking and Cautionary Statements:
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 as
contained in Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934 that reflect
management’s current views and estimates regarding future market
conditions, company performance and financial results, operational
investments, business prospects, new strategies, the competitive
environment and other events. You can identify these statements by
the fact that they use words such as "anticipate," "assume,"
"believe," "estimate," "expect," "guidance," "intend," "outlook,"
"plan," "project" and other words and terms of similar meaning.
Such statements reflect our current views and estimates with
respect to future market conditions, company performance and
financial results, return of capital, operational investments,
business prospects, new strategies, the competitive environment and
other events. These statements are subject to certain risks and
uncertainties that could cause actual results to differ materially
from the potential results discussed in such forward-looking
statements. Readers should review Item 1A, Risk Factors, of our
Annual Report on Form 10-K for the fiscal year ended January 29,
2022, for a description of important factors that could cause our
actual results to differ materially from those contemplated by the
forward-looking statements made in this release. Among the factors
that could cause actual results and outcomes to differ materially
from those contained in such forward-looking statements are the
following: the duration and scope of the COVID-19 pandemic and its
resurgences and the impact on demand for our products and services;
levels of consumer confidence; interruptions and other supply chain
issues; inflation/rising product costs; any material disruption in
our relationship with or the services of third-party vendors, risks
related to our exclusive brand products and risks associated with
vendors that source products outside of the U.S.; macroeconomic
pressures in the markets in which we operate (including but not
limited to the effects of COVID-19, increased levels of inventory
loss due to organized crime, petty theft or otherwise, fluctuations
in housing prices, energy markets, and jobless rates and those
related to the conflict in Ukraine); future outbreaks, catastrophic
events, health crises and pandemics; susceptibility of our products
to technological advancements, product life cycles and launches;
conditions in the industries and categories in which we operate;
changes in consumer preferences, spending and debt; competition
(including from multi-channel retailers, e-commerce business,
technology service providers, traditional store-based retailers,
vendors and mobile network carriers); our ability to attract and
retain qualified employees; changes in market compensation rates;
our expansion strategies; our focus on services as a strategic
priority; our reliance on key vendors and mobile network carriers
(including product availability); our ability to maintain positive
brand perception and recognition; our company transformation; our
mix of products and services; our ability to effectively manage
strategic ventures, alliances or acquisitions; our ability to
effectively manage our real estate portfolio; trade restrictions or
changes in the costs of imports (including existing or new tariffs
or duties and changes in the amount of any such tariffs or duties);
our reliance on our information technology systems; our dependence
on internet and telecommunications access and capabilities; our
ability to prevent or effectively respond to a cyber-attack,
privacy or security breach; product safety and quality concerns;
changes to labor or employment laws or regulations; risks arising
from statutory, regulatory and legal developments (including tax
statutes and regulations); risks arising from our international
activities (including those related to the conflict in Ukraine);
failure to effectively manage our costs; our dependence on cash
flows and net earnings generated during the fourth fiscal quarter;
pricing investments and promotional activity; economic or
regulatory developments that might affect our ability to provide
attractive promotional financing; constraints in the capital
markets; changes to our vendor credit terms; changes in our credit
ratings; and general economic uncertainty in key global markets and
worsening of global economic conditions or low levels of economic
growth. We caution that the foregoing list of important factors is
not complete. Any forward-looking statements speak only as of the
date they are made, and we assume no obligation to update any
forward-looking statement that we may make.
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version on businesswire.com: https://www.businesswire.com/news/home/20220727005877/en/
Investor Contact: Mollie O'Brien
mollie.obrien@bestbuy.com
Media Contact: Carly Charlson
carly.charlson@bestbuy.com
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