Best Buy’s
fourth-quarter results suggested the consumer electronics ice age may be coming to an end.
Shares of the electronics retailer rose Thursday after fiscal fourth-quarter earnings beat Wall Street estimates, and fiscal 2025 guidance came in largely in line with expectations.
Perhaps even more encouraging to investors was CEO Corie Barry’s reassurance that the current fiscal year will be a year of “increasing industry sales stabilization.”
“We remain confident that our industry will grow again after two years of decline,” Barry said on a call with analysts Thursday.
It hasn’t been easy for electronic retailers lately. Many households stocked up on new televisions and consoles during the pandemic years, resulting in fewer sales throughout 2023. Inflation, a sluggish technology innovation cycle, and consumer preference of spending on services over goods also have curbed consumer demand, Barry said.
The budding argument among bulls say the chill surrounding the sector could thaw in 2024, as people replace or upgrade electronics they bought in 2020. Demand trends for gaming, laptops, and TV units were also seen to improve modestly throughout the holiday season, and innovation in tech is picking up. Bears, however, have said there’s still a risk that upgrade and innovation cycles get pushed back.
Best Buy’s report had enough to back up either perspective, but with the stock up 4.4% in premarket trading the market seemed to be siding with the bull take Thursday.
Demand—measured by revenue and same-store sales—was still in a slump in the fourth quarter, yet showed signs of improvement. Revenue of $14.65 billion was ahead of estimates for $14.56 billion, but dipped 0.6% year-over-year. Domestic sales were the biggest pain point, declining 0.9% from the same period last year to $13.41 billion, while international sales increased 2.7% to $1.24 billion.
Same-store sales also fell, down 4.8%, but that was better than estimates that called for a drop of 5.4%.
Adjusted earnings of $2.72 were better than estimates for $2.52. The company also announced Thursday that its board approved a quarterly dividend of 94 cents a share, a 2% increase.
“We would characterize BBY’s 4Q23 print as in line with a few incremental positives and negatives, but skewing to the upside,” wrote D.A. Davidson Michael Baker in a note Thursday.
Guidance also contributed to the stock’s rally Thursday. For fiscal 2025, Best Buy anticipates earnings of between $5.75 and $6.20 a share, with the high end of that guidance beating estimates of $6.16.
Revenue for the year was forecast at $41.3 billion to $42.6 billion. Wall Street estimated revenue of $42.3 billion. Same-store sales likely will decline—on the low end of guidance, they will be up to 3% lower year-over-year, and on the high end, they will be flat, which is what Wall Street has forecast.
“When you get past the flat-to-slightly-down year this year, we do expect when you look out into the next number of years that the industry will continue to grow and that we will grow along with it,” said Matt Bilunas, Best Buy’s chief financial officer.
Write to Sabrina Escobar at sabrina.escobar@barrons.com
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