Best Buy Co Inc.’s (NYSE:BBY) Canadian stores are seeing steeper drops in sales than are the company's stores in the U.S. – at least when those sales are converted into U.S. dollars.
The Minnesota-based venture, which bases what it calls its “international” division in Vancouver, reported its earnings this morning. Best Buy operated in Mexico for 13 years up until 2021, when it exited that country. It now only operates stores in Canada and the U.S.
The company reported that its “international segment” generated US$693 million in sales in the quarter that ended July 30. That was down 8.8 per cent from the US$760 million that it generated in the same quarter last year.
“This decrease was primarily driven by a comparable sales decline of 5.4 per cent and the negative impact of approximately 340 basis points from foreign currency exchange rates,” the company explained in a news release.
“International operating income was $19 million, or 2.7 per cent of revenue, compared to $28 million, or 3.7 per cent of revenue, last year.”
The reason why Best Buy’s international operating income declined was because the company spent more on general administrative expenses even as it enjoyed higher margins, the company said.
The company’s U.S. business also struggled. It generated US$8.89 billion in sales in the quarter ended July 30, down 7.1 per cent from US$9.569 billion in the same quarter in 2022.
The only time Best Buy CEO Corie Sue Barry mentioned Canada on her company’s conference call with analysts this morning was to express support for those displaced by forest fires.
“I want to make sure we acknowledge the wildfires in Maui, but also the wildfires we've seen in Canada and those bracing for a hurricane in Florida,” she said. “Our hearts genuinely go out to those impacted.”
Best Buy Canada was based in Burnaby for decades, but last year moved into a new 77,500-square-foot headquarters at 425 West 6th Avenue, east of Cambie Street. That is about half of the size of its former space at 8800 Glenlyon Parkway in Burnaby.
Best Buy entered Canada when it bought B.C. entrepreneur Hassan Khosrowshahi's Future Shop electronics chain for $580 million in cash in November 2001. For many years, it kept some stores branded Future Shop alongside others branded Best Buy.
Analysts had dim expectations for the company, in part because there has been a consumer-spending shift toward experiences and away from hard goods. As such, Best Buy's announcement that its sales fell was no surprise. If anything, analysts were impressed that its sales did not fall by a greater amount.
The company's shares were trading at US$77.72, up 4.89 per cent at around noon Vancouver time.