Sign at the main entrance of a Best Buy store in Venice, Florida.
Erik McGregor | Light flare | Getty Images
Best buy reported mixed results Tuesday as the retailer’s sales for the holiday quarter declined and missed Wall Street expectations, but its earnings beat estimates as it showed improved profitability.
For the current fiscal year, the consumer electronics retailer expects revenue to be between $41.2 billion and $42.1 billion, up from $41.69 billion in the most recent fiscal year. It expects adjusted earnings per share to be between $6.30 and $6.60, after reporting adjusted earnings per share of $6.43 for the prior fiscal year.
Best Buy expects comparable sales, a metric that tracks sales online and at stores open for at least 14 months, to range from a 1% decline to a 1% increase.
In a press release, CEO Corie Barry said demand for consumer electronics remained lackluster during the gifting season, but internal company data indicates Best Buy’s market share in the industry “was at least stable.”
Chief Financial Officer Matt Bilunas said in his own statement that the company is “excited about the momentum in our business.” But he added that company executives “expect to continue to navigate a mixed macroeconomic environment.”
Best Buy shares rose more than 4% in morning trading.
Here’s how the retailer performed for the fiscal fourth quarter compared to what Wall Street expected, according to a survey of analysts by LSEG:
- Earnings per share: $2.61 adjusted versus $2.47 expected
- Income: $13.81 billion versus $13.88 billion expected
In the quarter ended Jan. 31, Best Buy’s net income jumped to $541 million, or $2.56 per share, from $117 million, or 54 cents per share, in the year-earlier quarter. Excluding one-time expenses, including charges related to its healthcare business, Best Buy reported adjusted earnings per share of $2.61.
Revenue was down from $13.95 billion in the year-ago quarter. Still, on an annual basis, revenue increased to $41.69 billion from $41.53 billion the previous fiscal year. Best Buy’s annual revenue has declined over the past three fiscal years.
For about four years, Best Buy has blamed its slowing sales on more price-sensitive U.S. consumers, a slower housing market and less technological innovation. All of these factors have caused some shoppers to delay their tech purchases, especially big-ticket items like new refrigerators.
On a call with reporters, Barry said the company continues to see consistent behaviors from higher-income cohorts and lower-income groups. Although she said Best Buy is seeing some slowdown in sales of more expensive items, the other end of the customer base is “resilient” and “bargain-oriented.”
More than half of Best Buy’s customer base is in the $100,000 or more income bracket, she added.
“I think it’s important to know that in places where we’ve seen innovation, where there’s a little more novelty…people are willing to access these higher price points across all income cohorts,” Barry said on the call.
Higher tariffs have also increased costs for Best Buy, since many consumer electronics are imported. Barry said the company’s “last resort” was to raise prices, and it was instead focusing on diversifying its supply chain and negotiating costs with suppliers.
Comparable sales fell 0.8% in the fourth quarter as the company saw slowing sales of appliances and home theaters. These declines were partially offset by growth in computer and mobile phone sales, the company said.
Best Buy has shifted to more profitable businesses, including selling ads and offering more merchandise through its third-party marketplace, which launched in August. Barry said in the company’s press release that Best Buy’s advertising partners had nearly doubled from the previous year and the retailer had significantly increased the number of products available in the market.