Best Buy Sales Drop, JLL Posts 818% Net Income Growth in Q1 As HP Focuses on AI PCs

Today, consumer electronics retailer Best Buy (NYSE: BBY) posted a year-over-year (YoY) drop in overall sales to $8.84 billion for the quarter ending May 4, from $9.46 billion the year prior.

The retailer's comparable sales declined by 6.1%, attributable to high living and borrowing costs. Despite a downward trend in inflation, it remains a top concern among many people in the US as they focus on recovering from the US Federal Reserve's years-long monetary tightening campaign. However, Best Buy's GAAP diluted earnings-per-share (EPS) increased 2% YoY to $1.13 from $1.11.

During the latest earnings call, Best Buy CEO Corie Barry said that "the mix of macro factors

continued to create a challenging sales environment for our category during the quarter, and our sales were slightly softer than our expectations. We will continue to navigate the environment while remaining focused and energised about our purpose to Enrich Lives through Technology."

Best Buy CFO Matt Bilunas said for the next quarter: "We expect comparable sales to decline by approximately 3% and our non-GAAP operating income rate to be approximately 3.5%."

The company's full-year revenue guidance was between $41.3 billion and $42.6 billion, with expected capital expenditures of $750 million. The leadership plans to bolster its market share in computing, home theatre, and on-demand appliances through new-age marketing strategies and competitive product pricing.

Bank of America analyst Robert Ohmes retained an "Underperform" rating on the stock. He predicted "continued weakness in the appliance category given YoY declines in pricing and higher retail promotions as well as potential market share pressures from competitor Costco" in a note to clients.

Despite the lacklustre result, the company could preserve its profits as the domestic gross profit rate increased to 23.4% YoY during the quarter from 22.6% due to improved financial performance from its membership offerings and reduced administrative and general costs across verticals. The Best Buy stock gained over 11% on May 30 to hover above $80.

Meanwhile, real estate advisory and investment services provider Jones Lang LaSalle Incorporated (NYSE: JLL) posted a 9% YoY increase in revenue for the quarter ended March 31 to $5.12 billion from $4.71 billion. The company's diluted EPS also increased to $1.37 from a loss of $0.19 last year.

Meanwhile, net income for the quarter increased by 818% YoY to $66.1 million from a loss of $9.2 million, driven by several cost-trimming measures and growth in segments like workplace and property management, markets advisory, and revenue from investment sales.

"JLL's strong start to 2024 was driven by growth in both our resilient and transactional business lines. In addition, the impact of our cost actions over the last year allowed us to meaningfully improve our profitability while still investing in our business to take advantage of growth opportunities ahead," said Christian Ulbrich, JLL CEO, in the latest earnings call.

He continued: "With an uncertain outlook, our clients are relying on JLL's advisory services, data capabilities and real estate expertise more than ever. We continue to execute our strategy, focusing on helping our clients navigate a difficult commercial real estate environment and delivering value for our stakeholders."

Consensus indicates a "moderate-buy" signal for the stock with double-digit upside potential based on 12-month stock forecasts. The stock was trading at $198.95 on May 30.

Computer maker HP (NYSE: HPQ), on May 29, posted a 0.8% YoY drop in revenue for the quarter-ended April to $12.8 billion from $12.9 billion. The company's GAAP net earnings and diluted EPS fell 42% each YoY in the quarter to $607 million and $0.61, respectively.

HP's income from personal computer systems increased 3% YoY to $8.42 billion, as net revenue from commercial personal systems increased 6% in the quarter from the year prior. A possible reason for the jump in sales might have been driven by commercial clients upgrading their systems ahead of Microsoft ending support for Windows 10 next year.

Meanwhile, net revenue from its printing business fell 8% YoY to $4.4 billion amid competitive pricing from competitors like Canon. However, for 2024, HP expects to generate a free cash flow between $3.1 billion and $3.6 billion.

"We delivered a solid quarter and first half and unveiled an innovative portfolio of solutions designed for the AI and hybrid era," said HP CEO Enrique Lores in the earnings release. "We have a clear strategy and are well-positioned to drive profitable growth across our business."

In an interview with Yahoo Finance, Lores said the Windows upgrade cycle drove higher-than-anticipated PC demand from businesses, and companies are also upgrading units from the pandemic.

In May, HP unveiled its AI PCs with more computing power to handle AI-powered applications like Microsoft's copilot features easily. Lores believes around 10% of personal computers sold this year will have AI features. He expects the share of AI PC sales to increase to 60% in three years.

"We continue to think HPQ remains well positioned to benefit from the PC upcycle, which should only accelerate in the second half and in FY25. While Print remains a drag, and Print EBIT margins are expected to be flat to down quarter over quarter in Q3, this should be somewhat offset by cost savings actions, sequential hardware growth in Q4, and upside from personal systems," noted Evercore analyst Amit Daryanani.

The stock jumped above 20% on May 30 to trade at just under $40.

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