Retail giant Best Buy Co. Inc. (NYSE:BBY) saw sales and profit tumble in the quarter that ended on July 30, but because its performance was better than analysts had expected, the company's share price rose more than two per cent on a dismal day for North American stock markets.
The Minneapolis, Minnesota-based electronics retailer, which bases its Canadian headquarters in Vancouver, saw overall second-quarter sales fall 12.1 per cent, to US$10.33 billion – better than the US$10.24 billion in revenue that analysts had expected.
The retailer noted that sales in Canada fell by much less: 4.2 per cent. It did not reveal the exact dollar amount of its Canadian sales. Its international sales, which include transactions in Mexico and the U.K., were US$760 million, down 9.3 per cent, compared with the same quarter one year ago.
Sales in Canada were less valuable to the company than they were in the same quarter one year ago because the value of the Canadian dollar plunged by 420 basis points against its U.S. equivalent, the company said.
Best Buy's overall net income fell to US$306 million ($1.35 per share), down from US$734 million ($2.90 per share) in the same quarter one year ago.
Its international division was more lucrative than that in the U.S. That division's gross profit rate was 23.4 per cent, down from 24.3 per cent in the same quarter one year ago. That is better than the company's 22-per-cent gross profit rate in the U.S., which was down from 23.7 per cent in the same quarter one year ago.
The company in July had cut its overall profit and sales forecasts. Today, it reaffirmed its full-year guidance.
Part of what hurt Best Buy's sales was the trend toward people spending on experiences instead of goods. One year ago, the COVID-19 pandemic was more prominent, and more people were buying goods instead of eating out at restaurants or going on vacations.
Best Buy entered Canada when it bought B.C. entrepreneur Hassan Khosrowshahi's Future Shop electronics chain for $580 million in November 2001. For many years, it kept some stores branded Future Shop alongside others branded Best Buy. Eventually, however, it phased out the Future Shop store banner.
Best Buy Canada was originally based in Burnaby, but earlier this year started moving into a new 77,500-square-foot headquarters at 425 West 6th Ave., east of Cambie Street. That is about half of the size of its former space at 8800 Glenlyon Parkway in Burnaby. Best Buy Canada told BIV in an email today that it has completed its headquarters move.
Around noon Pacific Time, Best Buy's shares were trading up more than 2.7 per cent, at US$75.78, while the the S&P500 was trading down 1.1 per cent, to 3,986 points.