Customers wait outside a Best Buy store in downtown Toronto, Ontario, on November 23, 2020 to withdraw their orders online.
Geoff Robbins | AFP | Getty Images
Best Buy’s fourth-quarter earnings exceeded Wall Street expectations on Thursday, but fell short of revenue as sales growth slowed compared to previous months of the pandemic.
The retailer said its sales are likely to decline further. Chief Financial Officer Matt Bilunas said same-store sales are expected to range from a 2% drop to a 1% gain this year. The forecast assumes that customers resume or accelerate spending in areas such as travel and dining in the second half of the year, he said.
The shares fell more than 7% in the pre-market with the news.
Here’s what the company released for the fiscal quarter ended January 30, compared to what Wall Street expected, based on a survey of analysts at Refinitiv:
- Earnings per share: $ 3.48, adjusted, against $ 3.45 expected
- Revenue: $ 16.94 billion versus expected $ 17.23 billion
Best Buy’s net income in the fourth quarter rose to $ 816 million, or $ 3.10 per share, from $ 745 million, or $ 2.84 per share, a year earlier.
Excluding items, he earned $ 3.48 per share, more than the $ 3.45 per share expected by analysts surveyed by Refinitiv.
Net sales increased to $ 16.94 billion from $ 15.2 billion a year earlier, but fell short of estimates of $ 17.23 billion.
Sales online and in stores open at least 14 months have grown 12.6%, less than the 14.7% growth that analysts had expected, according to StreetAccount. It is a sharp drop in relation to the 23% growth rate in the third quarter.
Although still strong, the pace of growth in online sales in the US has also slowed. It grew 89.3% compared to 174% in the third quarter and 242% in the second quarter.
The retailer benefited from restrictions on staying at home that boosted purchases of equipment such as computer monitors for the home office, headphones and laptops for children who go to school remotely and appliances to make preparing meals easier.
The growing use of technology, however, has shaken the way people buy. Instead of wandering the store floor, more customers surfed the site, dispatched purchases to their homes, or retrieved them from the company’s parking lot.
Best Buy estimated that online sales will represent about 40% of total domestic sales next year.
This had implications for Best Buy’s workforce. The company recently confirmed that it is laying off an unspecified number of store employees as part of a reorganization.
He also said that he plans to spend $ 750 million to $ 850 million in capital expenditures and repurchase at least $ 2 billion in shares. His board approved a 27% increase in the quarterly dividend to 70 cents per share.
At the close of Wednesday, Best Buy shares rose nearly 33% from last year. The company’s market value is $ 29.38 billion.
Read the Best Buy press release here.