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Best Buy Reports Q1 FY21 Results

Enterprise Revenue Decreased 6.3%

Domestic Comparable Online Sales Increased 155.4%

GAAP Diluted EPS of $0.61

Non-GAAP Diluted EPS of $0.67

MINNEAPOLIS, May 21, 2020 — Best Buy Co., Inc. (NYSE: BBY) today announced results for the 13-week first quarter ended May 2, 2020 (“Q1 FY21”), as compared to the 13-week first quarter ended May 4, 2019 (“Q1 FY20”).

(Click here for a PDF version. Click here to view full release and statements.)

 Q1 FY21Q1 FY20
Revenue ($ in millions)
Enterprise$8,562 $9,142   
Domestic segment$7,915 $8,481   
International segment$647 $661   
Enterprise comparable sales % change1 (5.3)% 1.1%  
Domestic comparable sales % change1 (5.7)% 1.3% 
Domestic comparable online sales % change1 155.4% 14.5%  
International comparable sales % change1 0.2% (1.2)%  
Operating Income      
GAAP operating income as a % of revenue 2.7% 3.7%  
Non-GAAP operating income as a % of revenue  2.9% 3.8%  
Diluted Earnings per Share (“EPS”)      
GAAP diluted EPS$0.61 $0.98   
Non-GAAP diluted EPS$0.67 $1.02   

For GAAP to non-GAAP reconciliations of the measures referred to in the above table, please refer to the attached supporting schedule.

“On behalf of all of us at Best Buy, I want to extend our sincere appreciation and gratitude to all those who are on the front lines working to keep us safe or maintain essential services, and we offer our heartfelt sympathy to all those who have lost someone to this virus or who are sick with COVID-19,” said Corie Barry, Best Buy CEO. “Our leadership team has been responding to the evolving situation with a focus on keeping our customers and our employees safe while we meet our customers’ needs.”

“In the middle of Q1, we shifted all our stores to a curbside-only operating model and were able to retain approximately 81% of last year’s sales2 during the last six weeks of the quarter, even though not a single customer set foot in our stores,” Barry continued. “The strong sales retention is a testament to the strength of our multi-channel capabilities and the strategic investments we have been making over the past several years.” 

Barry continued, “The COVID-19 pandemic has changed the way we work, learn, care for ourselves and, importantly, connect with each other. Against that backdrop, our purpose has never been more relevant: to enrich lives through technology. It is because of that purpose that we were, in virtually every jurisdiction with a stay-at-home order in place, designated an essential retailer because of the products and services we offer.”

“As challenging as the current situation is, I am certain Best Buy will remain a strong, vibrant company that is well positioned to deliver on our purpose and thrive in a new and different environment. In fact, we have taken the opportunity to accelerate aspects of our strategy as this environment has quickly shifted the ways in which customers interact with retailers,” said Barry.

Barry concluded, “I want to take this moment to thank our employees, who have faced immense change with grit, determination and compassion and have helped us shape our approach to safe retailing. Many are working with customers every day, many of whom are also scared, frustrated and, occasionally, hostile in this COVID environment, to ensure they have access to the products and services they need. Others are working tirelessly to maintain a supply chain that delivers with speed and keeps our customers at home, and so many employees are making technical and operational changes every hour from their home offices. None of this is possible without their dedication, and I am truly grateful and feel lucky to be on the team with them.”

Best Buy CFO Matt Bilunas commented, “As a result of the ongoing uncertainty related to COVID-19, we suspended all FY21 financial guidance on March 21 and are not providing guidance today. Our priority has been and will continue to be the safety of our employees and customers while providing essential products and services during this time. We remain thoughtful about managing our profitability and liquidity, balancing our short-term decisions to navigate this unprecedented situation while preserving the elements of our strategy that will ensure we remain a vibrant company in the future.” 

Summary of Domestic Operational Changes

Except where otherwise directed by state and local authorities, starting March 22, the company proactively shifted to a contactless curbside-only operating model for all its Domestic stores on an interim basis. This allowed the company to continue to serve customers who purchased online or via the Best Buy app and requested pickup at their local store. Additionally, on March 22, large products such as appliances were delivered where permitted and under strict safety guidelines. All in-home installations and repairs were temporarily suspended and all in-home consultations started to be conducted virtually. During this time, there were no changes in customers’ ability to transact online and have their products shipped directly to their homes.

On April 27, after implementing new safety guidelines, the company resumed valuable services like large product delivery, in-home installations and repairs in approximately 80% of U.S. ZIP codes for new orders. 

At the beginning of Q2 FY21, on May 4, the company started welcoming customers back into its stores in innovative ways that follow strict social distancing practices and use proper protective equipment. Specifically, the company began offering a new consultation service to customers in store, by appointment only. The company currently has nearly 700 stores, or approximately 70%, operating this way. In addition, the company is evaluating additional changes, including expanding store hours and opening some stores beyond our current appointment-only model.

Domestic Segment Q1 FY21 Results

Domestic Revenue

Domestic revenue of $7.92 billion decreased 6.7% versus last year. The decrease was driven by a comparable sales1 decline of 5.7% and the loss of revenue from 24 permanent store closures in the past year.

The largest comparable sales growth drivers were computing and gaming. These growth drivers were more than offset by declines in home theater, mobile phones, digital imaging and services.

Domestic online revenue of $3.34 billion increased 155.4% on a comparable basis1 due to higher conversion rates and increased traffic. As a percentage of total Domestic revenue, online revenue increased to approximately 42.2% versus 15.4% last year. 

Domestic Gross Profit Rate

Domestic gross profit rate was 23.0% versus 23.7% last year. The gross profit rate decrease of approximately 70 basis points was primarily driven by higher supply chain costs as a result of the increased mix of online revenue.

Domestic Selling, General and Administrative Expenses (“SG&A”)

Domestic GAAP SG&A was $1.58 billion, or 19.9% of revenue, versus $1.68 billion, or 19.8% of revenue, last year. On a non-GAAP basis, SG&A was $1.56 billion, or 19.7% of revenue, versus $1.66 billion, or 19.6% of revenue, last year. Both GAAP and non-GAAP SG&A decreased primarily due to reduced incentive compensation expense, as the company did not pay or accrue short-term incentive expense for first quarter performance. Store payroll expense was lower compared to last year when including an employee retention credit of $69 million as a result of the Federal CARES ACT. This employee retention credit is a payroll tax credit, which represented approximately 50% of qualified wages and health benefits paid to retained employees not working as a result of COVID-19.

International Segment Q1 FY21 Results

International Revenue

International revenue of $647 million decreased 2.1% versus last year. This decrease was primarily driven by the impact of approximately 320 basis points of negative foreign currency exchange rates, which was partially offset by revenue from new stores opened in Mexico in the past year.

International Gross Profit Rate

International gross profit rate was 22.3% versus 24.2% last year. The gross profit rate decrease of approximately 190 basis points was primarily due to Canada, which was largely driven by a lower mix of higher-margin services revenue and higher supply chain costs as a result of the increased mix of online revenue.

International SG&A

International SG&A was $156 million, or 24.1% of revenue, versus $158 million, or 23.9% of revenue, last year. SG&A decreased primarily due to the favorable impact of foreign exchange rates.

Income Taxes

The Q1 FY21 effective tax rate was 27.4% versus 19.8% last year. On a non-GAAP basis, the effective tax rate was 27.2% versus 20.1% last year. The higher GAAP and non-GAAP effective tax rates were primarily due to a decrease in the tax benefit from stock-based compensation.

Dividends and Share Repurchases

In Q1 FY21, the company returned a total of $203 million to shareholders through dividends of $141 million and share repurchases of $62 million.

Today, the company announced its board of directors has authorized the payment of a regular quarterly cash dividend of $0.55 per common share. The quarterly dividend is payable on July 2, 2020, to shareholders of record as of the close of business on June 11, 2020.

As previously communicated, the company suspended all share repurchases as of March 21, 2020.

Conference Call

Best Buy is scheduled to conduct an earnings conference call at 8:00 a.m. Eastern Time (7:00 a.m. Central Time) on May 21, 2020. A webcast of the call is expected to be available at www.investors.bestbuy.comboth live and after the call.


(1) Comparable sales include revenue from all stores that were temporarily closed or operating an enhanced curbside-only operating model in Q1 FY21 as a result of COVID-19. The method of calculating comparable sales varies across the retail industry, including the treatment of store closures as a result of COVID-19. As a result, our method of calculating comparable sales may not be the same as other retailers’ methods. For additional information on comparable sales, please see our most recent Annual Report on Form 10-K, and any subsequent Quarterly Reports on Form 10-Q, filed with the Securities and Exchange Commission, and available at www.investors.bestbuy.com.

(2) The 81% sales retention is based on the company’s interim period data, which the company uses to monitor revenue performance on a daily or weekly interval. The sales retention estimate represents the year-over-year change compared to the same period in the prior fiscal year. Retention is based on absolute sales dollar changes and is not presented in accordance with the company’s comparable sales definition. The company’s interim sales data is unaudited and excludes quarter-end revenue accounting adjustments. Other companies may track interim period sales data using different methods and systems, and therefore, the estimated data presented here may not be comparable to any data released by other companies.

Forward-Looking and Cautionary Statements:

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that reflect management’s current views and estimates regarding future market conditions, company performance and financial results, operational investments, business prospects, new strategies, the competitive environment and other events. You can identify these statements by the fact that they use words such as “anticipate,” “believe,” “assume,” “estimate,” “expect,” “intend,” “foresee,” “project,” “guidance,” “plan,” “outlook,” and other words and terms of similar meaning. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from the potential results discussed in the forward-looking statements. Among the factors that could cause actual results and outcomes to differ materially from those contained in such forward-looking statements are the following: the duration and scope of the COVID-19 pandemic and the impact on demand for our products and services, levels of consumer confidence and our supply chain; the effects and duration of steps we take in response to the pandemic, including the implementation of our interim and evolving operating model; actions governments, businesses and individuals take in response to the pandemic and their impact on economic activity and consumer spending; the pace of recovery when the COVID-19 pandemic subsides; general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; competition (including from multi-channel retailers, e-commerce business, technology service providers, traditional store-based retailers, vendors and mobile network carriers), our expansion strategies, our focus on services as a strategic priority, our reliance on key vendors and mobile network carriers, our ability to attract and retain qualified employees, changes in market compensation rates, risks arising from statutory, regulatory and legal developments, macroeconomic pressures in the markets in which we operate, failure to effectively manage our costs, our reliance on our information technology systems, our ability to prevent or effectively respond to a privacy or security breach, our ability to effectively manage strategic ventures, alliances or acquisitions, our dependence on cash flows and net earnings generated during the fourth fiscal quarter, susceptibility of our products to technological advancements, product life cycle preferences and changes in consumer preferences, economic or regulatory developments that might affect our ability to provide attractive promotional financing, interruptions and other supply chain issues, catastrophic events, health crises, pandemics, our ability to maintain positive brand perception and recognition, product safety and quality concerns, changes to labor or employment laws or regulations, our ability to effectively manage our real estate portfolio, constraints in the capital markets or our vendor credit terms, changes in our credit ratings, any material disruption in our relationship with or the services of third-party vendors, risks related to our exclusive brand products and risks associated with vendors that source products outside of the U.S., including trade restrictions or changes in the costs of imports (including existing or new tariffs or duties and changes in the amount of any such tariffs or duties) and risks arising from our international activities.

A further list and description of these risks, uncertainties and other matters can be found in the company’s annual report and other reports filed from time to time with the Securities and Exchange Commission (“SEC”), including, but not limited to, Best Buy’s Annual Report on Form 10-K filed with the SEC on March 23, 2020. Best Buy cautions that the foregoing list of important factors is not complete, and any forward-looking statements speak only as of the date they are made, and Best Buy assumes no obligation to update any forward-looking statement that it may make.

Investor Contact:Media Contact:
Mollie O’BrienCarly Charlson