Best Buy Beats Q1 Estimates On Growth In Gaming, Better-Than-Expected Mobile Sales
Best Buy‘s (NYSE:BBY) stock surged more than 11% after the announcement of its better-than-expected first quarter results, as both its revenue and earnings per share came in ahead of market expectations. The company’s stock reached $61.25 on Thursday, which marked a 43% increase year-to-date.
Key takeaways from the Q1 results are below:
- Best Buy’s revenue grew 1% year-over-year (y-o-y) to around $ 8.5 billion, primarily due to an enterprise comparable sales increase of 1.6%.
- This growth was driven by strong performance in gaming, and better than expected results in mobile, primarily due to new unlimited data plan offers from many carriers, which generated increased demand across devices. In addition, the improvement in overall sales trends within the quarter due to the arrival of delayed federal tax refund checks also aided in this growth.
- Best Buy’s domestic segment’s revenue increased 1% y-o-y to $7.9 billion, as the domestic comparable sales grew 1.4%, driven by strength in computing, connected Home and gaming, partially offset by continued softness in tablets.
- On the e-commerce front, the company’s online revenue was nearly 13% of the total domestic revenue compared to 10.6% in Q1 fiscal 2017. Moreover, the domestic comparable sales grew 22.5%, driven by conversion and traffic.
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- In the international segment, the company’s revenue increased marginally to o $616 million, driven by comparable sales growth of 4%, driven by continued growth of online revenue in Canada and Mexico
- The company’s non-GAAP gross profit increased 3% y-o-y due to improved margin rates across categories such as appliances and home theater.
- The retailer reported higher-than-expected non-GAAP EPS of $0.60, up 40% y-o-y. This strong bottom line performance was driven by better performance in the domestic business along with lower SG&A and a higher gross profit rate.
- For the second quarter, Best Buy expects its sales to benefit from the positive category momentum from the first quarter. As a result, the company expects its total revenue to be in the range of $8.6-$8.7 billion in the second quarter. It also expects domestic comparable sales growth in the range of 1.5% to 2.5%, and adjusted earnings per diluted share of $0.57 to $0.62 for the company.
- For the full year fiscal 2018, the company raised its guidance to reflect the better-than-expected first quarter results, and now expects revenue growth of approximately 2.5% compared to the prior outlook of approximately 1.5%. It also expects full year non-GAAP operating income growth of 3.5% to 8.5% versus its original outlook of 1% to 3% growth.
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