BBY’s revenue ahead of estimates
Best Buy (BBY) generated revenue of $8.5 billion in fiscal 1Q18 (ended April 29, 2017), beating the consensus analysts’ revenue estimate of $8.3 billion. As discussed in Part 1 of this series, the company’s top-line growth amid an otherwise tough retail market impressed investors and sent its stock soaring on May 25.
Revenue growth drivers
Best Buy’s revenue grew 1% in fiscal 1Q18 due to an impressive performance in the gaming category, which benefitted from strong demand for Nintendo’s console Switch launched in March. The company also experienced better-than-expected sales in the mobile category due to new unlimited data plan offers from wireless carriers, which drove higher demand across devices.
Best Buy also attributed its revenue growth in fiscal 1Q18 to delayed federal tax refund checks and strong Android preorder sales.
BBY’s revenues by segment
Best Buy’s Domestic segment revenues rose 1.1% to $7.9 billion. This increase was primarily driven by higher same-store sales in the computing, connected home, and gaming categories. But the company experienced lower tablet sales and weakness in the home theater category.
The online revenue of BBY’s Domestic segment rose 22.5% in fiscal 1Q18 on a comparable basis to ~$1.0 billion. This impressive growth was the result of increased conversion rates and a rise in traffic.
Best Buy’s International segment delivered a 0.3% rise in its fiscal 1Q18 revenue to $616 million, driven by higher same-store sales in Canada and Mexico.
By comparison, rival Gamestop’s (GME) sales rose 3.8% to $2.1 billion in fiscal 1Q17 (ended April 29, 2017). The company’s sales growth was driven by strong sales of Nintendo Switch.
After its strong results in fiscal 1Q18, Best Buy raised its fiscal 2018 revenue growth guidance to ~2.5%, as compared to the company’s previous outlook of 1.5% growth.
We’ll discuss the company’s margins in the next part of this series (below).