Best Buy Co. Inc. (NYSE:BBY) released its first-quarter results before the opening bell on May 21. The consumer electronics retailer surpassed Wall Street's earnings and revenue projections.
Snapshot of the quarter
The Richfield, Minnesota-based company posted adjusted earnings of $0.67 per share, topping estimates of $0.41. Revenue, on the other hand, dropped 6.8% from the prior-year quarter to $8.56 billion. Analysts had anticipated revenue of $8.26 billion.
Comparable store sales plunged 5.3% in the reported quarter, which was less than the anticipated decline of 10%. The comps decline was attributed to poor sales of home theatre, mobile phones, digital imaging and services, which more than offset the growth in computing and gaming products.
Best Buy's CEO Corie Barry had the following to say:
"In the middle of Q1, we shifted all our stores to a curbside-only operating model and were able to retain approximately 81% of last year's sales2 during the last six weeks of the quarter, even though not a single customer set foot in our stores. The strong sales retention is a testament to the strength of our multi-channel capabilities and the strategic investments we have been making over the past several years."
Domestic and international segments
Domestic revenue stood at $7.92 billion, down 6.7% year over year due to comps decline of 5.7% as well as revenue loss from store closures on in the previous year. Online revenue was $3.34 billion, which reflected 155.4% growth from the same period last year. Higher conversion rates and increased traffic drove the increase.
On the international front, revenue declined 2.1% to $647 million, weighed down by the unfavorable impact of foreign currency exchange rates. Gross profit dipped to 22.3% from 24.2% reported last year owing to poor sales in Canada.
In May, Best Buy started reopening stores, which were closed in late March due to the Covid-19 virus. Nearly 70% of the stores reopened are offering consultation services to customers only by appointment.
As part of its cost-saving measures, the company announced in mid-April that it would give roughly 51,000 employees time off work with no pay. To strengthen its liquidity position, the company has temporarily halted its stock buyback program. The company's chief financial officer Matt Bilunas said:
"We remain thoughtful about managing our profitability and liquidity, balancing our short-term decisions to navigate this unprecedented situation while preserving the elements of our strategy that will ensure we remain a vibrant company in the future."
Best Buy pulled its financial forecast for fiscal 2021, citing the global uncertainty caused by the coronavirus pandemic.
Disclosure: I do not hold any positions in the stocks mentioned.
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This article first appeared on GuruFocus.