Best Buy’s (BBY) Fourth Quarter 2021 Profits Beat Projections, But Sales Slowly Rise

Best Buy’s fourth-quarter profits beat Wall Street expectations on Thursday, but it failed to generate revenue as its sales growth slowed from the months prior to the pandemic.

The retailer said its sales would likely slow even further. CFO Matt Bilunas said comparable store sales are expected to range from a 2% decline to a 1% gain this year. The forecast assumes that customers will resume or step up spending in areas such as travel and restaurants in the second half of the year, he said.

Shares fell more than 7% in pre-market news trading.

Here’s what the company reported for the fiscal quarter ended Jan. 30 compared to what Wall Street expected, based on an analyst survey by Refinitiv:

• Earnings per share: $ 3.48, adjusted, vs. $ 3.45 expected
• Revenue: $ 16.94 billion against $ 17.23 billion expected

Best Buy’s fourth-quarter net income rose to $ 816 million, or $ 3.10 per share, from $ 745 million, or $ 2.84 per share, a year earlier.

Excluding items, it gained $ 3.48 per share, higher than the $ 3.45 per share expected by analysts polled by Refinitiv.

Net sales reached $ 16.94 billion, from $ 15.2 billion a year earlier, but are below estimates of $ 17.23 billion.

Online and in stores that have been open for at least 14 months rose 12.6%, less than the 14.7% growth analysts expected, according to StreetAccount. This is a sharp drop from the growth rate of 23% in the third quarter.

While still strong, the pace of online sales growth in the United States has also slowed. It rose 89.3% against 174% in the third quarter and 242% in the second quarter.

The retailer benefited from stay-at-home restrictions which boosted purchases of equipment such as computer monitors for the home office, headphones and laptops for remote-school children and kitchen appliances to facilitate the preparation of meals.

However, the increasing use of technology has changed the way people shop. Instead of walking around the store, more and more customers browsed the website, shipped their purchases to their homes, or picked them up from the company’s parking lot.

Best Buy has estimated that online sales will account for about 40% of total domestic sales in the coming year.

This had implications for the Best Buy workforce. The company recently confirmed that it was laying off an unknown number of store workers as part of a reorganization.

He also said he plans to spend $ 750 million to $ 850 million in capital spending and buy back at least $ 2 billion in shares. Its board approved a 27% increase in the quarterly dividend to 70 cents per share.

As of Wednesday’s close, shares of Best Buy were up nearly 33% in the past year. The market value of the company is $ 29.38 billion.

Read Best Buy’s press release here.