On November 21, 2023, Best Buy Co Inc (BBY, Financial) released its 8-K filing, detailing the financial results for the third quarter ended October 28, 2023. The electronics retailer reported a decline in comparable sales of 6.9% compared to the same period last year, with total revenue falling from $10.587 billion to $9.756 billion. Despite the sales downturn, Best Buy demonstrated operational resilience with a GAAP operating income as a percentage of revenue at 3.6%, slightly up from 3.4% in the prior year.
Financial Performance Overview
Best Buy's GAAP diluted earnings per share (EPS) for the quarter was $1.21, a slight decrease from $1.22 in Q3 FY23. The Non-GAAP diluted EPS also saw a decline to $1.29 from $1.38 in the previous year. CEO Corie Barry commented on the results, stating,
Today we are reporting better-than-expected profitability on slightly softer-than-expected revenue for the third quarter."Barry also noted the uneven and unpredictable consumer demand, leading the company to adjust its annual revenue outlook.
Segment Performance and Financial Guidance
The Domestic segment's revenue decreased by 8.2% due to a 7.3% decline in comparable sales. However, the Domestic gross profit rate saw an improvement, primarily driven by enhanced membership offerings, favorable product margin rates, and reduced supply chain costs. In contrast, the International segment experienced a 3.4% revenue decrease and a decline in operating income to $18 million from $33 million last year.
Looking ahead, CFO Matt Bilunas provided guidance for the fourth quarter, expecting a comparable sales decline between 3.0% to 7.0% and a non-GAAP operating income rate ranging from 4.7% to 5.0%. For the full fiscal year 2024, the additional 53rd week is anticipated to add approximately $700 million of revenue to Q4 and benefit the company's full-year non-GAAP operating income rate by about 10 basis points.
Capital Return to Shareholders
In Q3, Best Buy returned $313 million to shareholders through dividends and share repurchases. The board of directors has also authorized a regular quarterly cash dividend of $0.92 per common share, payable on January 2, 2024.
Balance Sheet and Cash Flow Highlights
The balance sheet reflects a decrease in cash and cash equivalents from $932 million to $636 million year-over-year. Merchandise inventories slightly increased to $7.562 billion from $7.294 billion. Total assets stood at $16.882 billion, marginally down from $17.021 billion in the previous year. The company's cash flow statements show a total cash provided by operating activities at $290 million for the nine months ended October 28, 2023, compared to a use of $108 million in the same period last year.
Best Buy's financial results underscore the company's ability to navigate a challenging retail environment while maintaining a focus on profitability and shareholder returns. As the holiday season approaches, Best Buy is prepared to cater to a deal-focused customer base with promotions, new shopping experiences, and an expanded product assortment.
For more detailed information, investors and analysts are encouraged to review the full financial statements and management's commentary within the 8-K filing.
Explore the complete 8-K earnings release (here) from Best Buy Co Inc for further details.
