Best Buy $BBY, the US electronics retailer, released its 2Q results. Comparable sales fell 6.2% from a year ago.

Results

Company-wide comparable sales fell 6.2%, compared to a 12.1% decline a year ago and analysts' estimates of a 6.38% decline.

U.S. sales declined 7.1% year over year, primarily due to lower comparable sales, which fell 6.3%. This is the lowest decline since early 2022, so it may be the first swallow in the company's turnaround. Home appliances, home theaters, computers and mobile phones were the biggest drivers of the decline, while gaming grew. Online sales in the U.S. were $2.76 billion, down 7.1% on a comparable basis.

Percentage change in US comparable sales Source.

The gross margin in the US was 23.1% compared to 22% a year ago.

The International segment generated sales of $693 million. International sales were USD 6969 million, down 8.8% year-on-year. This decline was primarily due to a 5.4% decline in comparable sales and a negative impact of approximately 340 basis points from currency movements. The operating profit of the International segment was EUR 19 million. The International segment was USD 19 million, or 2.7% of sales, down from USD 28 million in the previous year. USD 28.5 million with a margin of 3.7%.

For the second quarter, the company returned $279 million to its shareholders, $200 million through dividends and $79 million through share repurchases.

Outlook

The company's CFO said of the outlook: "In May, we said we were preparing for a number of scenarios within our annual guidance range. Today, we are lowering the high end of our revenue outlook to the previous midpoint, with the low end remaining unchanged. At the same time, we are narrowing the range for profitability, effectively raising the midpoint of our previous annual outlook for adjusted operating profit and adjusted earnings per share. Specifically, in the third quarter, we expect comparable sales to be slightly better than the negative 6.2% we reported for the second quarter and an adjusted operating margin of approximately 3.4%."

Thus, for the 53-week fiscal year 2024, the company expects revenue of $43.8 billion to $44.5 billion, while it previously expected a range of $43.8 billion to $45.2 billion, analysts' estimate is $44.22 billion. The company expects comparable sales to be 4.5% - 6% lower than a year ago, while it previously expected a decline in the range of 3% - 6%.

It expects FY24 adjusted operating margin of 3.9%-4.1%, while the earlier estimate was 3.7%-4.1%. Analysts' consensus is for a decline of 4.3%.

On an adjusted basis, the company expects earnings per share to be in the range of $6 to $6.4, compared to earlier expectations of $5.70 to $6.50 and analysts' expectations of $6.06.

CEO comment

CEO Corie Barry commented on the results, "Today we are reporting second quarter results that are at the high end of the guidance we shared in May and profitability that is above expectations. [...] These results demonstrate our strong operating capabilities as we balance our response to current revenue pressures with continued strategic investments. Our results were above expectations and reflect the consumer electronics industry, which continues to be under pressure due to excess demand in prior years and various macroeconomic factors that we are all familiar with. However, we still expect to have bottomed out this year after two years of declining sales. Next year, the consumer electronics market should stabilize and perhaps even grow, thanks to natural improvement and renewal cycles and the normalization of technological innovation..."