Earnings beat, revenue miss
Segment performance
Best Buy saw revenues decline across both its segments in Q3. In the Domestic segment, revenue decreased 8.2% to $9 billion, driven mainly by a 7.3% drop in comparable sales. From a merchandising perspective, the biggest drivers of the comps decline were appliances, computing, home theater and mobile phones. Growth in gaming partly offset the decrease.
Domestic online revenue fell 9.3% to $2.75 billion in Q3. Domestic gross profit rate rose to 22.9% from 21.9% last year, benefiting from higher services margin rates for its membership offerings as well as favorable product margin rates and lower supply chain costs.
In the International segment, revenue decreased 3.4% to $760 million, due mainly to a 1.9% decline in comparable sales. Gross profit rate dropped to 22.1% from 23.4% last year, mainly due to unfavorable product margin rates.
Guidance cut
In its earnings report, Best Buy said that consumer demand has been uneven and difficult to predict and that based on the sales trends seen during the third quarter and thus far in November, the company felt it prudent to lower its annual revenue outlook.
For the full year of 2024, Best Buy now expects revenue of $43.1-43.7 billion versus the previous range of $43.8-44.5 billion. Comparable sales is now expected to decline 6.0-7.5% versus the previous expectation of 4.5-6.0%. Adjusted EPS is now expected to be $6.00-6.30 versus the prior outlook of $6.00-6.40.