Shares of Best Buy the US equivalent of JB Hi Fi jumped over 10% after the big CE and appliance retailer beat profit forecasts on growing demand for services and notebooks.
The retailer who went after profits Vs revenue in the last quarter delivered a 23.4% increase in profits despite revenue falling 6.8%.
In Australia several leading retailers including JB Hi Fi is cutting back on discounting, instead they are going after profits as consumers cut back on spending.
At Best Buy Revenue fell 6.5% from the year-ago period to $8.85 billion, this was short of expectations.
Comparable store sales declined 6.1% this was up from a 10.1% drop in the same period a year earlier.
Revenues came in at $8.20 billion, while gross profit rose to 23.4% from 22.6%, which the company credited to gains in the services category, including membership offerings.
Notebook sales which are on the rise in Australia, helped offset pullbacks in purchases of appliances, home theatre, gaming, and mobile phones.
International revenue was 3.3% lower to $6.44 million, with a gross profit rate of 22.6% versus 23.7% in fiscal 2024.
Best Buy CEO Corie Barry said the company “made progress on our FY25 priorities, grew our paid membership base and drove improvements in our customer experiences.”
Analyst Anthony Chukumba from Loop Capital Markets claimed that Best Buy’s offerings were “largely discretionary,” and with consumers already grappling with higher costs for essential items due to inflation, “maybe you don’t need to buy that new 60-inch television.”
He acknowledges that the company did a “really good job controlling what they could control,” as evidenced by the year-over-year increase in operating margins and earnings.
Best Buy said that they plan to integrate generative AI into its operations.
Chukumba expresses optimism, stating, “I do think that product innovation and hopefully a better macro environment will help them as the year progresses.”
