Best Buy(US:BBY)2024-12-06 21:01Financial Performance - Best Buy reported revenue of $9.4 billion for the third quarter of fiscal 2025, a decrease of 3.2% compared to the same period last year[71]. - Comparable sales declined by 2.9% in the third quarter and 3.7% for the first nine months of fiscal 2025, reflecting challenges in the consumer electronics industry[71]. - Gross profit for the third quarter was $2.2 billion, representing a gross profit margin of 23.5%[71]. - Selling, general and administrative expenses (SG&A) were $1.9 billion, accounting for 19.8% of revenue in the third quarter[71]. - Operating income for the third quarter was $350 million, with an operating income margin of 3.7%[71]. - Net earnings for the third quarter increased to $273 million, with diluted earnings per share of $1.26[71]. Domestic Segment Performance - Domestic segment revenue for the three months ended November 2, 2024, was $8,697 million, a decrease of 3.3% compared to $8,996 million for the three months ended October 28, 2023[78]. - Comparable sales for the domestic segment decreased by 2.8% in the three months ended November 2, 2024, compared to a decline of 7.3% in the prior year[78]. - Domestic gross profit for the three months ended November 2, 2024, was $2,049 million, with a gross profit margin of 23.6%, up from 22.9% in the prior year[78]. - Domestic SG&A expenses for the three months ended November 2, 2024, were $1,716 million, representing 19.7% of revenue, compared to 19.2% in the prior year[78]. - Domestic operating income for the three months ended November 2, 2024, was $337 million, with an operating income margin of 3.9%, up from 3.7% in the prior year[78]. International Segment Performance - International segment revenue for the three months ended November 2, 2024, was $748 million, a decrease of 1.6% compared to $760 million for the three months ended October 28, 2023[81]. - Comparable sales for the international segment decreased by 3.7% in the three months ended November 2, 2024, compared to a decline of 1.9% in the prior year[81]. - International gross profit for the three months ended November 2, 2024, was $168 million, with a gross profit margin of 22.5%, up from 22.1% in the prior year[81]. - International SG&A expenses for the three months ended November 2, 2024, were $155 million, representing 20.7% of revenue, compared to 19.9% in the prior year[81]. - International operating income for the three months ended November 2, 2024, was $13 million, with an operating income margin of 1.7%, down from 2.4% in the prior year[81]. Tax and Cash Management - Best Buy's effective tax rate decreased to 23.9% in the third quarter of fiscal 2025, down from 24.7% in the same quarter last year[75]. - Non-GAAP effective tax rate for the three months ended October 28, 2023, was 24.7%, with a decrease attributed to increased tax benefits from green energy incentives[86]. - Cash and cash equivalents as of November 2, 2024, were $643 million, a decrease from $1,447 million on February 3, 2024, primarily due to dividend payments and capital expenditures[89]. - Total cash provided by operating activities for the nine months ended November 2, 2024, was $561 million, compared to $290 million for the same period in the previous year[91]. - Restricted cash decreased to $295 million as of November 2, 2024, from $423 million on October 28, 2023, primarily due to releases of product protection reserves[96]. Capital Expenditures and Shareholder Returns - Capital expenditures are expected to approximate $750 million in fiscal 2025, down from $795 million in fiscal 2024[92]. - The total cost of shares repurchased in the third quarter of fiscal 2025 was $135 million, with an average price per share of $95.43[98]. - Cash dividends declared and paid increased to $202 million in the third quarter of fiscal 2025, up from $201 million in the same period last year[98]. Strategic Initiatives - Best Buy plans to reduce its Domestic store count by approximately 10 to 12 stores in fiscal 2025[74]. - The company is focusing on enhancing its App and in-store experiences to drive customer engagement and sales growth[67]. - The company is exploring opportunities to leverage its scale for incremental profitable revenue streams over time[70]. Interest Rate Exposure - As of November 2, 2024, the company had $0.9 billion in cash, cash equivalents, and restricted cash, with $0.5 billion of debt swapped to floating rate, resulting in a net asset balance exposed to interest rate changes of $0.4 billion[109]. - A 50-basis point increase in short-term interest rates would lead to an estimated $2 million increase in interest income, while a decrease of the same magnitude would result in a $2 million decrease[109]. Foreign Currency Impact - Foreign currency exchange rate fluctuations negatively impacted revenue by approximately $6 million in the third quarter and $25 million in the first nine months of fiscal 2025[111].