Customers wait outside of a Best Buy store in downtown Toronto, Ontario on November 23, 2020 to pick up their online orders.
Geoff Robbins | AFP | Getty Images
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 growth rate 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.
He said in a news release that the forecast “assumes that customers resume or accelerate spend in areas that were slowed during the pandemic, such as travel and dining out, in the back half of the year.”
The company estimated that online sales will make up about 40% of total domestic sales in the year ahead. It said it plans to spend between $750 million and $850 million on capital expenditures and buy back at least $2 billion in stock.
Shares are down about 5% 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. Online sales in the U.S grew by 89.3% and made up 43% of the company’s total domestic sales.
Best Buy is among the retailers that saw sales rise rather than fall as consumers spent more time at home. It has benefited as much of people’s lives have moved into the home, requiring people to buy additional 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.
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.
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.