2023-05-25 07:16:49 ET
Best Buy ( NYSE: BBY ) gained in early trading on Thursday after posting a mixed Q1 earnings report . Results during the quarter were impacted by customers who were said to clearly be feeling cautious and making tradeoff decisions as they continue to deal with high inflation and low consumer confidence.
The retailer said it saw domestic comparables sales fell 10.1% during the quarter. The largest drivers of the comparable sales decline on a weighted basis were computing, appliances, home theater and mobile phones. Those drivers were partially offset by growth in the gaming and services categories. International comparable sales dropped 5.5% during the quarter.
Best Buy's ( BBY ) domestic gross profit rate improved 70 basis points to 22.6% of sales. The higher gross profit rate was primarily due to improved financial performance from the company’s membership offerings, favorable product margin rates, and the profit-sharing revenue from the company’s private label and co-branded credit card arrangement. The international business gross profit rate was down 60 basis points to 23.7% due chiefly to a lower mix of revenue from the higher margin rate services category.
Non-GAAP operating income as a percentage of revenue declined to 3.4% of sales from 4.6%.
Guidance for Q2: Revenue of $43.8B to $45.2B vs. consensus of $44.57B; Comparable sales decline of 3.0% to 6.0%; Enterprise non-GAAP operating income rate of 3.7% to 4.1%; Non-GAAP effective income tax rate of approximately 24.5%; Non-GAAP diluted EPS2 of $5.70 to $6.50 vs. consensus of $6.20.
Guidance for the full year: Comparable sales -3% to -6% vs. -4.5% consensus.
"We continue to appropriately balance the need to adjust in response to the current industry sales trends with the need to invest so we can capitalize on opportunities as our industry moves through this downturn and returns to growth," noted CEO Corie Barry.
Shares of Best Buy ( BBY ) rose 4.53% in postmarket trading to $72.28 vs. the 52-week trading range of $60.79 to $93.32.
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Best Buy warns on 'cautious' consumers in guiding for negative comparable sales growth