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Sat. Jul 20th, 2024

Best Buy delivers major profit increase despite sales decline – channel news

By Vaseline May30,2024

Shares of Best Buy, the US equivalent of JB Hi Fi, rose more than 10% after the major CE and appliances retailer beat profit forecasts on growing demand for services and notebooks.

The retailer that focused on profit versus sales in the last quarter achieved a profit increase of 23.4%, despite a sales decline of 6.8%.

In Australia, several leading retailers, including JB Hi Fi, are cutting back on discounts but banking on profits as consumers cut back on spending.

At Best Buy, sales fell 6.5% from the same period a year ago to $8.85 billion, which was less than expected.

Comparable store sales fell by 6.1%, compared to a decline of 10.1% in the same period a year earlier.

Revenue reached $8.20 billion, while gross profit rose from 22.6% to 23.4%, which the company attributed to gains in the services category, including membership offerings.

Rising notebook sales in Australia have offset declines in appliance purchases, home cinema, gaming and mobile phones.

International revenue was down 3.3% to $6.44 million, with a gross profit percentage of 22.6% versus 23.7% in fiscal 2024.

Best Buy CEO Corie Barry said the company has “made progress on our FY25 priorities, growing our paid membership base and delivering improvements to our customer experiences.”

Analyst Anthony Chukumba of Loop Capital Markets claimed that Best Buy’s offering was “largely discretionary,” and with consumers already grappling with higher costs for essential items due to inflation, “you may not need to buy that new 60-inch television .”

He acknowledges that the company has “controlled very well what it could control,” as evidenced by the year-on-year increase in operating margins and profits.

Best Buy said they plan to integrate generative AI into their operations.

Chukumba is optimistic, saying: “I think product innovation and hopefully a better macro environment will help them as the year progresses.”

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