Best Buy's Holiday-Quarter Sales Topped Expectations But The Retailer Is Warning Of A Further Decline In Sales In The Coming Months

The city's best-known electronics retailer reported earnings and revenue for the holiday quarter that were higher than Wall Street expected, despite waning consumer demand for electronics not being as bad as had been predicted.

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Its shares fell about 4% in early trading on Thursday as a result of a warning that sales will decline in the coming year.

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The retail giant has stated that it expects its revenues for the upcoming fiscal year to be between $43.8 billion and $45.2 billion, a decrease from the $44.8 billion it reported in the last fiscal year, as well as a decline in same-store sales of between 3% and 6%. During the first quarter of the fiscal year, the majority of that pressure is expected to be felt by the company, and then it is expected to level out during the second half.

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“The [consumer electronics] industry is preparing for another down year,” said Corie Barry, CEO.

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Based on the results of a survey of analysts by Refinitiv, here is how the company performed for the quarter that ended on Jan. 28, compared to what Wall Street was expecting for the period:

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• Earnings per share: $2.61 compared to $2.11 expected

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• Revenue: $14.74 billion compared to $14.72 billion expected

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Best Buy was one of the biggest beneficiaries of the sales trends that accompanied the Covid pandemic, as consumers bought computer monitors so they could work remotely, home theaters so they could pass the time, and kitchen appliances so they could cook more. As a result of the pandemic, the company reported a 3% drop in its quarterly sales compared with the same period before the pandemic, when it had revenues of $15.2 billion.

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Due to its pandemic-era momentum, the consumer electronics retailer faces challenging comparisons in the upcoming quarters, particularly as shoppers feel strained by higher grocery bills and other higher costs due to inflation, which is driving up their grocery expenditures. Moreover, Best Buy sells a lot of high-ticket items, such as laptops and smartphones, which customers may not be able to afford as regularly as they would like or may be forced to postpone as a result of other priorities.

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As reported by StreetAccount, same-store sales decreased by 9.3% during the fourth quarter of 2014, which was slightly higher than analysts' expectations of a decrease of 9.2%. A decline of 9.9% in same-store sales for the full year was in line with the retailer's guidance that same-store sales would decline by about 10%, which it provided in November. This key metric, also called comparable sales, tracks sales online and in stores that have been open for more than 14 months.

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Earlier this summer, Best Buy had joined other retailers in cutting its outlook for the next year. A number of jobs were also cut by the company across the country this summer, but the number was undisclosed.

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The net income of Best Buy for the fiscal fourth quarter decreased by 21% to $495 million, or $2.23 per share, compared to $626 million, or $2.62 per share, for the same quarter last year.

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Best Buy is making a play to revive its storefront portfolio in order to revive its margins and remains relevant in an increasingly digital age, according to Barry, who spoke during a conference call with analysts on Thursday. Approximately a quarter of the company's projected $850 million capital expenditures for the 2024 fiscal year will go toward the revamp, which amounted to $200 million in capital expenditures.

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By Wednesday's close, Best Buy had risen nearly 3% in its share price so far this year, in line with the performance of the S&P 500 during the same period of time. Wednesday's closing price for its shares brought its market value to $18.26 billion, bringing its share price to $82.54.