Best Buy (BBY) is turning around a three-year decline in sales growth — but it's not enough to keep investors satisfied.
On Tuesday before the market open, the electronics retailer reported fourth quarter results that beat Wall Street's expectations. Same-store sales jumped 0.5%, compared to a 1.45% decrease anticipated. This comes after 12 consecutive quarters of negative same-store sales growth.
“I am pleased to report better-than-expected sales for the fourth quarter driven by strong growth in computing as well as improved sales performance in other categories,” Best Buy CEO Corie Barry said in the release.
This coming fiscal year, the company expects revenue of $41.4 billion to $42.2 billion. Wall Street expected guidance of $41.69 billion. Same-store sales are expected to be flat to up 2%, compared to estimates of a 1.44% increase.
Adjusted earnings per share are projected to be $6.20 to $6.60 for the year; Wall Street had estimated $6.55. The guidance does not include the impact of tariffs.
Best Buy stock plummeted 14% on Tuesday morning as investors digested the "uncertainty of tariffs" and their potential impact, Telsey Advisory Group Joe Feldman told chof360 Finance. Feldman said he wasn't surprised at the reaction, adding, "Excluding tariffs, the 2025 guidance was solid."
The replacement cycle is kicking in around laptops, notebooks, and phones, especially as innovation around AI ramps up. Evercore analyst Greg Melich called the year a "sweet spot" for the four-to-five-year replacement cycle since the pandemic spending spree started in 2020.
Barry said the Geek Squad played a key role in helping "customers understand what is unique about Copilot+ AI PCs" or seeing if they want to upgrade ahead of the "upcoming Windows 10 upgrade cycle."
"We continue to see a consumer that is willing to spend on high price point products when they need to or when there is technology innovation," CFO Matt Bilunas said in the release.
Here's what Best Buy posted in the fourth quarter, compared to Bloomberg estimates:
Adjusted earnings per share: $2.58, versus $2.40
Net sales: $13.95 billion, versus $13.69 billion
Same-store sales growth overall: 0.5%, versus -1.45%
Total US same-store sales growth: 0.2%, versus -1.34%
Sales growth for:
Appliances: -11.4%, versus -8.9%
Entertainment: -10.9%, versus -7.47%
Consumer electronics: -2.2%, versus -4.38%
Computing and mobile phones: 6.5%, versus 4.13%
Services: 9.9%, versus 4.38%
International: 3.8% versus -1.95%
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The company also shared full-year results.
For the fiscal year, same-store sales fell 2.3%, less than the previous projected range of a 2.5% to 3.5% decline. The Street expected a 2.93% decline.
Revenue was $41.53 billion, above the guidance range of $41.1 billion to $41.5 billion. Adjusted earnings per share came in at $6.37, compared to the guidance range of $6.10 to $6.25.
On a call with investors, Barry discussed expanding other profit streams, including launching Best Buy Marketplace and ads.
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A second round of tariffs from President Trump started on Tuesday, with new duties on America's top three trading partners: Canada, China, and Mexico.
The president imposed 25% duties on Canadian and Mexican imports following a 30-day pause. He also implemented a second round of 10% duties on Chinese imports, after instituting 10% in February.
Barry said on the call that China and Mexico are its top two sources for products.
"While Best Buy only directly imports 2% to 3% of our overall assortment, we expect our vendors across our entire assortment will pass along some level of tariff costs to retailers, making price increases for American consumers highly likely," Barry said.
Read more: What are tariffs, and how do they affect you?
She added that if the initial 10% tariff on China were to stay in effect, it would have a "negative impact in the ballpark of 1 point of comparable sales." The second quarter to fourth quarter results would feel the brunt of that, she said.
Best Buy did not specify at the time what sort of price increase would go into effect.
Brooke DiPalma is a senior reporter for chof360 Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected].
