Why Consumer Electronics Retailer Best Buy Shares Are Dropping Today

Best Buy Co Inc BBY shares are trading lower after the company reported third-quarter FY24 earnings and slashed the guidance.

BBY reported a third-quarter FY24 sales decline of 7.8% year-on-year to $9.76 billion, missing the analyst consensus estimate of $9.91 billion.

Domestic revenue decreased 8.2% Y/Y, and International revenue fell 3.4%. Enterprise comparable sales decreased 6.9%.

Gross profit fell 4.3% Y/Y to $2.2 billion, with the margin expanding 90 basis points to 22.9%. Operating income as a percentage of revenue expanded 20 basis points to 3.6%. Operating income for the quarter fell 3% to $354 million.

Non-GAAP EPS of $1.29 beat the consensus estimate of $1.19.

Best Buy held $636 million in cash and equivalents as of October 28, 2023. Operating cash flow was $290 million for nine months.

In Q3 FY24, the company returned a total of $313 million to shareholders through dividends of $201 million and share repurchases of $112 million.

BBY's board of directors has authorized the payment of its regular quarterly cash dividend of $0.92 per common share, payable on January 2, 2024, to shareholders of record on December 12, 2023.

"In the more recent macro environment, consumer demand has been even more uneven and difficult to predict," said Corie Barry, Best Buy CEO.

Outlook: Best Buy cut FY24 revenue guidance from $43.8 billion-$44.5 billion to $43.1 billion-$43.7 billion versus an estimate of $44.16 billion.

BBY tightened FY24 adjusted EPS guidance from $6.00-$6.40 to $6.00-$6.30 versus an estimate of $6.20.

Best Buy sees FY24 comparable sales decline of 6% - 7.5% (prior 4.5% - 6% decline).

Best Buy CFO Matt Bilunas said, "For the fourth quarter, we expect our comparable sales to decline in the range of 3.0% to 7.0%. On the profitability side, we expect our Q4 FY24 non-GAAP operating income rate to be in a range of 4.7% to 5.0%, which compares to a rate of 4.8% last year."

Price Action: BBY shares are trading lower by 4.50% at $65.04 on the last check Tuesday.

Photo Via Wikimedia Commons