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HomeGADGETSELECTRONICSBest Buy holiday results beat estimates; are consumers buying electronics again?

Best Buy holiday results beat estimates; are consumers buying electronics again?

Best Buy Co. Inc. (NYSE: BBY) on Thursday posted better-than-expected results for the fourth quarter, but said that sluggish demand for consumer electronics could continue into coming year.

For the quarter ended Feb. 3 — a period that includes the crucial holiday shopping season — the Richfield-based retailer reported sales of $14.65 billion, down from $14.73 billion in the same period a year earlier. Comparable domestic sales fell 4.8%, though the decline on international sales was much smaller, just 1.4%.

Net earnings slid to $460 million, or $13 per share, from $495 million or $2.24 per share. Excluding one-time impacts — including a $169 million restructuring charge that included an unknown number of layoffs — adjusted earnings rose to $2.72 per share from $2.61. It’s unclear when the job cuts will happen. Executives said much of the restructuring would occur in Best Buy’s current, 2025 fiscal year, though Chief Financial Officer Matt Bilunas told analysts that $65 million of the charge is for “actions that won’t be implemented until fiscal 26.”

Those figures topped expectations from analysts who on average had predicted adjusted earnings of $2.51 per share on sales of $14.53 billion.

Shares of Best Buy are up nearly 4% on the news in premarket trading.

“I’m proud of the performance of our teams across the company as they showed resourcefulness, passion, and an unwavering focus on our customers this past year,” said Best Buy Corie Barry in a statement. “In the fourth quarter and throughout FY24, we demonstrated strong operational execution as we navigated a pressured consumer electronics sales environment.”

The environment she mentions hasn’t been a favorable one for Best Buy for the past year or so. The retailer enjoyed a sales surge during the Covid-19 pandemic as stuck-at-home consumers spent heavily on home offices and entertainment systems. However, the rush didn’t last, and since mid-2022, consumers have shown little interest in upgrading.

The company has adjusted by cutting expenses. Besides the just-disclosed layoff plans, Best Buy cut hundreds of in-store jobs a year ago and recently put a chunk of its headquarters up for lease.

It also shifted focus to other areas, like furniture and health technology. But it’s still primarily an electronics retailer, and its fortunes will improve faster if it consumers start buying big-screen TVs, mobile phones and video game systems.

Last year, Barry had expressed hope that the electronics sector could see “see more stabilization next year, and possibly growth in the back half of the year.”

On Thursday, she tempered those earlier comments a bit, forecasting only “increasing industry sales stabilization” for its fiscal 2025 year. Best Buy expects revenue in the range of $41.3 billion to $42.6 billion — a drop from the just completed year, when it posted sales of $43.4 billion.

Adjusted earnings are expected between $5.75 to $6.20.

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