The Vancouver-based Canadian subsidiary of Minneapolis' Best Buy Co. Inc. (NYSE:BBY) substantially outperformed its parent company for revenue growth in the most recent quarter, according to Best Buy's earnings report released Thursday.
The jolt from Canadian operations helped Best Buy surpass analysts' sales expectations even though the company's share price fell as much as 6.6 per cent earlier Thursday morning after its CEO, Corie Barry, said on a conference call that she would maintain the company's annual guidance.
Best Buy Canada employs about 10,000 people, making it one of the largest retailers based in B.C. That compares with staff counts at Lululemon Athetica Inc. (39,000), Save-On-Foods (22,000), Aritzia (more than 8,300) and London Drugs (more than 9,000).
Best Buy Canada generated US$740 million in revenue in the quarter ended Aug. 2, up 11.3 per cent compared with the same quarter in 2024, according to the earnings report.
That included a 7.6 per cent rise in comparable sales plus revenue from what the company calls Best Buy Express locations, which opened in the second half of last year. The Best Buy Express locations launched when Best Buy Canada partnered with Bell Canada to take over what had been known as The Source chain of stores. It rebranded the chain as Best Buy Express, and the stores sell mobile services, cellphones and electronics.
Those Canadian quarterly operations compare with the company's U.S. division, which generated US$8.7 billion in revenue, up a comparatively meagre 0.9 per cent versus the same quarter last year. Best Buy said that increase was primarily driven by comparable sales growing 1.1 per cent.
Overall, Best Buy generated US$186 million in quarterly profit, down from US$291 million in the same quarter one year ago.
Profit margins lagged in both jurisdictions though the U.S. division achieved a slight edge.
Best Buy's U.S. gross profit rate in the quarter was 23.4 per cent, down from 23.5 per cent in the same quarter last year primarily due to lower product margin rates, the company said. The same phenomenon was in place in Canada, where the gross profit rate was 21.8 per cent, compared with 23.9 per cent in the same quarter last year.
Barry was asked about the impact of tariffs on her business in the conference call with analysts.
"Some vendors are clearly communicating cost increases," she said.
"Some are adjusting promotions. Some are planning to potentially increase prices with new product introductions, which always happens in our space, and some are just not increasing them at all given these are very, very global supply chains."
She added that what she saw in the quarter related to tariffs was what she expected.
"Those strategies, when they're all put together, are ensuring that those cost increases are much, much less than the overall effective rate of the tariffs because we're able to put so many of those other mitigation strategies into play."
BIV asked Best Buy Canada president Mat Povse earlier this summer about the impact of tariffs on his business. Given that his business is in Canada and not in the U.S., his imports would not be subject to U.S. tariffs on foreign-made products. Instead, it would be subject to Canadian tariffs such as the Canadian retaliatory tariffs on the U.S.
Povse said that most of Best Buy Canada's imports come from Asia or Mexico and as a result they would not be subject to the retaliatory tariffs.
Prime Minister Mark Carney said last week he would get rid of many retaliatory tariffs on U.S. goods starting Sept. 1.
Povse is slated to be a speaker at the Retail Council of Canada's Retail West conference in Vancouver on Sept. 25.
