May 24, 2022
Best Buy May 24 reported first-quarter (ended April 30) entertainment revenue of $593.6 million, with same-store sales dropping 13.6%.
That compares with an uptick of more than 32% on revenue of $687 million during the previous-year period when consumers spent large on home entertainment due to COVID-19 shutdowns of alternative entertainment choices.
The segment includes products such as DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software.
International entertainment same-store revenue dropped 7.5% to $60.2 million from $65 million, which was up 12.2% from the previous-year period in 2020.
CEO Corie Barry said the sales declines across all retail categories underscore the outsized results during the pandemic when consumers upped their purchases in part due to government-imposed stay-at-home living.
“Even with the expected slowdown this year, we continue to be in a fundamentally stronger position than we were before the pandemic from both a revenue and operating income rate perspective,” Barry said in a statement. “We are confident in the strength of our business and excited about what lies ahead.”
On an earnings call, Barry said, “On one hand, consumers still have relatively strong balance sheets. They continue to spend, wages are up, and unemployment is at record lows. On the other hand, many consumers are lapping stimulus income they received last year and are also facing issues like higher gas and food prices, rising interest and mortgage rates, recession fears, stock market volatility, and geopolitical uncertainty, stemming from the war in Ukraine.
“Underlying all that is the gradual shifting of spend from stay-at-home purchases to more experiential spend on services and the activities many were unable to enjoy during the pandemic…. While the drivers of our results were largely as expected, the comparable sales decline of 8% was on the softer side, as inflationary pressures heightened throughout the quarter. That trend has continued into the beginning of Q2, and it does not appear that it will abate in the near term.”
Accordingly, she said, the company is “revising our guidance and now expect [a] fiscal ’23 comparable sales decline in the range of 3% to 6%. And we are correspondingly updating our non-GAAP operating income rate to a range of 5.2% to 5.4%. We will continue to proactively navigate this rapidly changing environment, balancing the day-to-day operations with our commitment to our long term-strategy and growth initiatives.”