Best Buy Readies CEO Transition After Strong Q1

Hubert Joly, who is exiting the CEO role, said that the first quarter represented “a good start” to the Best Buy fiscal year.

For the first quarter ended May 4, Best Buy posted net earnings of $265 million, or 98 cents per diluted share, versus $208 million, or 72 cents per diluted share, in the year-previous quarter. Adjusted for one-time charges, Best Buy diluted earnings per share were $1.02 versus 82 cents in the year-before period. Best Buy topped a MarketBeat analyst consensus estimate of 86 cents per adjusted diluted share.

Revenue was $9.14 billion versus $9.11 billion in the year-prior quarter. Operating income was $334 million versus $265 million in the period a year earlier.

According to Best Buy, domestic segment revenue increased 0.8% to $8.48 billion driven by comparable sales growth of 1.3% and revenue from GreatCall, a connected health and personal emergency response services provider the company acquired in the third quarter of the past fiscal year, partially offset by the loss of revenue from 105 Best Buy Mobile and 12 large-format store closures. The biggest comp growth drivers among product categories were appliances, wearables and tablets, Best Buy noted.

Domestic online revenue advanced 14.5% on a comparable basis to a total of $1.31 billion primarily due to higher average order values and increased traffic. Online revenue increased 180 basis points versus the quarter a year before to 15.4% as a proportion of total domestic segment revenue.

Joly, Best Buy chairman and CEO, said, “The first quarter was a strong quarter and a good start to the year. We reported comparable sales growth at the high end of our guidance and delivered better-than-expected profitability. In addition to these strong financial results, we continued to make significant progress implementing our Best Buy 2020 strategy to enrich lives through technology and further develop our competitive differentiation.”

He added, “We made an exciting announcement last month. On June 11, 2019, Corie Barry will become the fifth CEO in Best Buy’s 53-year history. At that time, I will transition to the newly created role of executive chairman of the board. I am very proud of the seamless transition we have decided to implement, as it reflects positively on our momentum as well as our focus on executive development and succession planning.”

Currently Best Buy’s CFO and strategic transformation officer, Barry said, “I am deeply grateful to Hubert and the rest of the board of directors for their confidence in me and their clear belief that this leadership evolution is in the best interests of Best Buy and all its stakeholders. As I think about my new role, I could not be more fortunate to have Mike Mohan at my side as our new president and COO. Our strategy is the right one and is resonating with customers.”

Barry added, “We are pleased with our first quarter performance. As we look to the full year, we are reiterating the guidance we provided at the beginning of the year. This outlook balances our better-than-expected Q1 earnings, the fact that it is early in the year and our best estimate of the impact associated with the recent increase in tariffs on goods imported from China. Specifically, I am referring to the increase in tariffs from 10% to 25% on the products on the $200 billion List 3 that originally went into effect last September.”