Best Buy’s Revenue Jumped 37% in Q1
It was another spectacular quarter for Best Buy Co.
On Thursday, the Richfield-based electronics retailer reported revenue of $11.6 billion in the first quarter of its 2022 fiscal year, which ended May 1. That marked a 37.2 percent jump over the same quarter last year. The company also reported a healthy bottom line in the quarter: Best Buy’s net earnings soared to $595 million, up from $159 a year ago.
Of course, a year ago, many of Best Buy’s stores were closed due to the Covid-19 pandemic. But the company’s most recent results were still “very strong” in comparison to earlier years, CEO Corie Barry said in a call with investors on Thursday morning.
“We are lapping an unusual quarter last year,” she said.
With scores of office workers flipping to hybrid work, the demand for technology products has never been greater. That’s been a boon for Best Buy. Computers and mobile phones made up 44 percent of the company’s domestic revenue in the first quarter, while other consumer electronics comprised 30 percent. Appliances comprised 15 percent of the company’s revenue in the most recent quarter.
But as Covid restrictions lift across the U.S., it’s not yet clear if those trends will continue. In a news release, CFO Matt Bilunas acknowledged as much: “As we think about the back half of this year,” he said, “we expect shopping behavior will evolve as customers are able to spend more time on activities like eating out, traveling and other events. It is difficult to know exactly how that impacts our business, especially as we lap particularly strong sales in the back half of last year.”
Best Buy leaders have already started preparing for changes in consumer habits. Earlier this year, the company laid off about 5,000 retail employees in anticipation of a shift toward digital shopping. That came even as the retailer reported record revenue.
The shift toward digital may not have materialized, though. In the most recent quarter, online sales made up 33.2 percent of Best Buy’s total domestic sales. That’s up from pre-pandemic levels of around 15 percent, but it’s also lower than company execs had planned.
“For the year, we have updated our working assumption regarding the mix of online sales, and now expect it to be in the mid-30 percent range from our original expectation of approximately 40 percent,” Barry said. “Nevertheless, clearly the pandemic has accelerated the evolution of customer shopping behavior.”
In all likelihood, the future of electronics sales will be “omnichannel,” as one data analytics expert told the Star Tribune.
It’s not immediately clear what all that means for Best Buy’s retail workforce. In its first quarter earnings report, Best Buy noted that the company logged a “net restructuring credit” of $42 million. That was largely due to “a reduction in expected termination benefits resulting from adjustments to previously planned organizational changes and higher-than-expected retention rates.” In other words, the company apparently didn’t have to dole out as much money in termination packages as expected.
Best Buy didn’t immediately respond to a request for comment on the restructuring credit.