Best Buy's fourth-quarter earnings outpaced Wall Street's expectations Thursday, but fell short on revenue as its sales growth slowed compared with earlier months of the pandemic.
The retailer said its sales will likely slow even further. Best Best Chief Financial Officer Matt Bilunas said the company expects same-store sales to drop by as much as 2% or grow by as much as 1% this year. The forecast assumes that customers resume or accelerate spending in areas such as travel and dining out in the back half of the year, he said in a press release.
Shares are down more than 7% in premarket trading on the news.
Here's what the company reported for the fiscal quarter ended Jan. 30 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $3.48, adjusted, vs. $3.45 expected
- Revenue: $16.94 billion vs. $17.23 billion expected
Best Buy's fourth-quarter net income rose to $816 million, or $3.10 per share, up from $745 million, or $2.84 per share, a year earlier.
Excluding items, it earned $3.48 per share, higher than the $3.45 per share expected by analysts surveyed by Refinitiv.
Net sales rose to $16.94 billion from $15.2 billion a year ago, but fell short of estimates of $17.23 billion.
Sales online and at stores open at least 14 months grew by 12.6%, less than the 14.7% growth that analysts expected, according to StreetAccount. That's a sharp decline from the growth rate of 23% in the third quarter.
While still strong, the pace of online sales growth in the U.S. slowed, too. It grew by 89.3% compared with 174% in the third quarter and 242% in the second quarter.
The retailer has benefited as much of people's lives have moved into the home, requiring purchases of equipment like a computer monitor for the home office, headphones and laptops for children going to school remotely and kitchen appliances to make it easier to cook meals.
The soaring use of technology, however, has shaken up the way that people shop. Instead of wandering around the store floor, more customers have browsed the website, shipped purchases to their home or retrieved them in the company's parking lot.
Best Buy estimated that online sales will make up about 40% of total domestic sales in the year ahead.
That's had implications for Best Buy's workforce. The company recently confirmed it is laying off some store employees as part of a reorganization, but did not specify how many.
It also said it plans to spend between $750 million and $850 million on capital expenditures and buy back at least $2 billion in stock. Its board approved a 27% increase in the quarterly dividend to 70 cents per share.
As of Wednesday's close, Best Buy shares are up nearly 33% over the past year. The company's market value is $29.38 billion.
Read Best Buy's press release here.
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February 25, 2021 at 07:16PM
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Best Buy earnings beat expectations, but shares fall as sales growth slows - CNBC
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