Stock Analysis on Net
Stock Analysis on Net

Best Buy Co. Inc. (NYSE:BBY)

This company has been moved to the archive! The financial data has not been updated since December 6, 2022.

Common-Size Income Statement

Best Buy Co. Inc., common-size consolidated income statement

Microsoft Excel
12 months ended: Jan 29, 2022 Jan 30, 2021 Feb 1, 2020 Feb 2, 2019 Feb 3, 2018 Jan 28, 2017
Revenue 100.00 100.00 100.00 100.00 100.00 100.00
Cost of sales -77.51 -77.63 -76.97 -76.77 -76.57 -76.04
Gross profit 22.49% 22.37% 23.03% 23.23% 23.43% 23.96%
Selling, general and administrative expenses -16.68 -16.77 -18.33 -18.69 -19.03 -19.15
Restructuring charges 0.07 -0.54 -0.09 -0.11 -0.02 -0.10
Operating income 5.87% 5.06% 4.60% 4.43% 4.37% 4.71%
Gain on sale of investments 0.00 0.00 0.00 0.03 0.00 0.01
Investment income and other 0.02 0.08 0.11 0.11 0.11 0.08
Interest expense -0.05 -0.11 -0.15 -0.17 -0.18 -0.18
Other income (expense) -0.03% -0.03% -0.04% -0.03% -0.06% -0.10%
Earnings before income tax expense and equity in income of affiliates 5.84% 5.03% 4.57% 4.40% 4.31% 4.61%
Income tax expense -1.11 -1.23 -1.04 -0.99 -1.94 -1.55
Equity in income of affiliates 0.01 0.00 0.00 0.00 0.00 0.00
Net earnings from continuing operations 4.74% 3.80% 3.53% 3.41% 2.37% 3.06%
Gain from discontinued operations, net of tax 0.00 0.00 0.00 0.00 0.00 0.05
Net earnings 4.74% 3.80% 3.53% 3.41% 2.37% 3.12%

Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).

An analysis of the common-size income statement from 2017 to 2022 reveals a strategic shift where operational efficiencies successfully offset a gradual compression in gross margins, leading to an overall improvement in net profitability.

Gross Profitability and Cost of Sales
A steady increase in the cost of sales is observable, rising from 76.04% of revenue in 2017 to 77.51% in 2022. Consequently, gross profit margins experienced a consistent decline, moving from 23.96% to 22.49% over the six-year period. This suggests a tightening of direct margins, potentially due to pricing pressures or increased procurement costs.
Operational Expense Management
A significant downward trend in selling, general, and administrative (SG&A) expenses is evident. These expenses decreased from 19.15% of revenue in 2017 to 16.68% in 2022. This reduction in overhead reflects improved operational efficiency and cost control measures that effectively mitigated the impact of the declining gross margin.
Operating Income Trends
Despite the pressure on gross profits, operating income as a percentage of revenue demonstrated resilience and growth. After a slight dip to 4.37% in 2018, operating margins expanded steadily to reach 5.87% by 2022. This expansion is primarily attributable to the aforementioned reduction in SG&A expenses.
Financial and Non-Operating Items
Interest expenses showed a marked decrease, falling from 0.18% of revenue in 2017 to 0.05% in 2022, indicating a reduction in the relative burden of debt service. Other income and investment gains remained minimal and stable, exerting little influence on the overall margin trajectory.
Net Earnings Performance
Net earnings as a percentage of revenue exhibited a positive trajectory in the latter half of the period. While the net margin fluctuated early on, reaching a low of 2.37% in 2018, it climbed consistently to 4.74% by 2022. This growth highlights a successful translation of operational efficiencies into bottom-line profitability.

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