How Much Does Best Buy Spend On Selling, General And Administrative Expenses?

Best Buy (NYSE: BBY) spent $8 billion on Selling, General and Administrative expenses in FY 2019 (ended January 2019) which was 18.7% of Total Revenues.  Trefis estimates the expense to be around 17.7% of Total Revenue in 2020 (ended January 2020). The Company’s total expenses have trended steadily higher from around $38.2 billion in 2017 to about $41.4 billion in 2019 (ended January 2019).  As a percentage of revenues, expenses have remained roughly flat at about 96-97%. Below, we discuss Best Buy’s net margins and Total expenses along with its components.

View our interactive dashboard analysis on Best Buy’s Expenses: How Does Best Buy Spend Its Money?

Best Buy’s Net Income Margins have increased between 2017 and 2019

• Best Buy’s Net Income margin increased from 3.1% in 2017 to 3.4% in 2019 but had a small fall in 2018 to 2.4% due to higher income tax expense.

Best Buy’s Total Expenses Have Increased by 8.4% between 2017 and 2019

• Best Buy’s total expenses have grown from $38.2 billion in 2017 to about $41.4 billion in 2019 which comes to 8.4% over the 2 years.
• For 2020, we expect total expenses to stand at $41.9 billion, which comprises of:
  • Operating Expenses = $41.21 Bil
  • Income tax expense = $0.66 Bil
  • Non-operating (income)/expense = $0.02 Bil

Below, we take a look at how the company’s key expense components have trended and the key reasons for the change.

1. Operating Expenses: Operating Expenses have increased from $37.5 billion in 2017 to $41 billion in 2019, driven primarily by a $2.9 billion increase in Cost of Sales.
   • Cost of Sales have increased from $30 billion in 2017 to $32.9 billion in 2019 and is expected to be around $33.5 billion in 2020. As % of Revenues, Cost of Sales has increased  gradually from 76% to 76.8% over the same period.
   • Selling, General and Administrative Expenses increased from $7.5 billion in 2017 to about $8 billion in 2019 and is expected to be around $7.7 billion in 2020. As % of Revenue, Selling, General and Administrative Expenses have declined from 19.2% in 2017 to 18.7% in 2019.
   • Restructuring expenses are quite nominal in relation to the overall expenses. They have increased from $39 million in 2017 to $46 million in 2019. As a % of Revenues, Restructuring expenses have remained constant at 0.1% except a dip in 2018.

2. Non-Operating Expenses: Best Buy’s Non-Operating Expenses are quite nominal in relation to the Overall expenses. They have decreased from $38 million in 2017 to $12 million in 2019. Trefis estimates the expenses to be around $15 million in 2020.
3. Tax Expense: Best Buy’s Income Tax Expense has declined from $609 million in 2017 to about $424 million in 2019, driven by U.S. Federal Income Tax Reforms, with the effective tax rate declining from 33.5% to 22.4%.

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