Customers shop at a Best Buy store in Chicago, Illinois on August 24, 2021.
Scott Olson | Getty Images
Best Buy on Thursday it reported holiday quarter sales and earnings that beat Wall Street expectations as declining demand for consumer electronics turned out to be better than feared.
Still, shares fell about 2% in premarket trading as the retailer warned of declining sales in the year ahead.
For the upcoming fiscal year, the consumer electronics retailer said it expects sales of between $43.8 billion and $45.2 billion, down from its most recent fiscal year, and a same-store sales decline of between 3% and 6%. The company expects to feel most of that pressure in the first quarter and then level off in the second half of the fiscal year.
“We are preparing for another bad year for the [consumer electronics] industry,” CEO Corie Barry said while talking to analysts.
Here’s how the company fared for the quarter ended Jan. 28 compared to what Wall Street expected, based on an analyst survey by Refinitiv:
- Earnings per share: $2.61 versus $2.11 expected
- Revenue: $14.74 billion versus $14.72 billion expected
Best Buy benefited greatly from sales trends during the Covid pandemic as consumers bought computer monitors for remote working, home theaters to pass the time and kitchen appliances as they cooked more. Quarterly revenue was down about 3% from the same pre-pandemic period, when it reported revenue of $15.2 billion.
The momentum of the pandemic era has created challenging comparisons for the consumer electronics retailer, especially as shoppers feel tense from higher grocery bills and other higher spending fueled by inflation. Best Buy also sells many large items, such as laptops and smartphones, purchases a customer might not make as often or purchases they put off if stretched by other spending priorities.
Same-store sales fell 9.3% in the fourth quarter, slightly above analyst expectations of 9.2%, according to StreetAccount. For the full year, same-store sales fell 9.9%, in line with the retailer’s November expectation that same-store sales would decline by about 10%. The key metric, also known as comparable sales, tracks sales online and in stores that have been open for at least 14 months.
Best Buy had joined other retailers this summer in lowering its outlook. It also cut an undisclosed number of jobs nationwide this summer.
In the fiscal fourth quarter, Best Buy’s net income fell 21% to $495 million, or $2.23 per share, from $626 million, or $2.62 per share, a year earlier.
Best Buy is doing everything it can to revitalize its storefront portfolio to return the company’s margins to pre-pandemic levels and “remain relevant in an increasingly digital era,” Barry said on the conference call. Thursday. The revamp will cost the company $200 million in capital expenditures, about a quarter of the company’s projected capital expenditures of $850 million for fiscal year 2024.
Since Wednesday’s close, shares of Best Buy are up nearly 3% year to date, in line with the performance of the S&P 500 over the same period. Shares closed at $82.54 on Wednesday, bringing the market value to $18.26 billion.
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