Best Buy (BBY) Q1 2022 Earnings Call Transcript
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Questions and Answers
Ladies and gentlemen, thank you for standing by. Welcome to Best Buy’s first quarter fiscal ’23 earnings conference call. [Operator instructions] I will now turn the conference call over to Mollie O’Brien, vice president of investor relations. Please go ahead.
Mollie O’Brien — Vice President, Investor Relations
Thank you, and good morning, everyone. Joining me on the call today are Corie Barry, our CEO; and Matt Bilunas, our CFO. During the call today, we’ll be discussing both GAAP and non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, and an explanation of why these non-GAAP financial measures are useful can be found in this morning’s earnings release, which is available on our website, investors.bestbuy.com.
Some of the statements we will make today are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may address the financial condition, business initiatives, growth plans, investments, and expected performance of the company and are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Please refer to the company’s current earnings release and our most recent 10-K and subsequent 10-Qs for more information on these risks and uncertainties. The company undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call.
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I will now turn the call over to Corie.
Corie Barry — Chief Executive Officer
Good morning, everyone, and thank you for joining us. I am proud of our team’s strong execution and focus on providing amazing service for our customers. Throughout the quarter, they navigated the uncertain macro environment and drove higher customer satisfaction scores while keeping energy and excitement going around the initiatives that we believe will drive longer-term opportunities. We grew our Totaltech membership, increased momentum in our health business, launched new product categories, and reached our fastest ever Q1 average online sales delivery speed.
At our investor update in March, we said we expected our fiscal ’23 financial results to look different, as we all lap stimulus and other government support, our industry cycles the last two years of unusually strong demand, and we leveraged our position of strength to continue to invest in our future. In addition, we said we expected promotional activity to increase and supply chain expenses to be a pressure. As such, we guided our annual comparable sales to decline 1% to 4% and our non-GAAP operating income rate to decline 60 basis points to approximately 5.4%. Therefore, the drivers of our Q1 financial results were largely as expected.
Macro conditions worsened since we provided our guidance in early March, including higher inflation and the war in Ukraine, which resulted in our sales being slightly lower than our expectations and supply chain costs a little higher than we planned. Our investment in Totaltech at approximately 100 basis points of gross margin pressure was in line with our expectations, and revenue from our credit card profit share was higher than anticipated. Overall, I am proud of our team’s ability to develop and execute plans to adapt to the changing environment over the past two years and to the more recent macroeconomic conditions. Our revenue and profitability remain much stronger than they were pre-pandemic.Q1 revenue of $10.6 billion is $1.5 billion, or 16%, higher than Q1 of pre-pandemic fiscal 20. And while our non-GAAP operating income rate is currently being impacted by our investments, it is still 80 basis points higher than fiscal ’20 even with those investments and […]
Best Buy (BBY) Q1 2022 Earnings Call Transcript