Best Buy Co. Inc. (BBBY, Financial) released its fourth-quarter results on Feb. 27 before the market opened. The consumer electronics retailer beat analysts’ earnings and revenue projections thanks to robust sales of headphones, appliances and other items during the holiday period.
By the numbers
The Richfield, Minnesota-based company posted adjusted earnings of $2.90 per share, topping estimates of $2.75. Revenue, on the other hand, grew 2.7% from the prior-year quarter to $15.2 billion. Analysts had anticipated revenue of $15.05 billion.
Same-store sales were up 3.2% in the reported quarter, which was more than the 1.9% growth analysts were expecting. The comps growth was attributed to strong demand for appliances, headphones, tablets and computing, which more than offset the decline in gaming.
Refelcting on Best Buy’s performance for the quarter, CEO Corie Barry said:
“We offered compelling holiday deals that resonated with customers and provided a seamless shopping experience, great inventory availability and fast and free delivery. Across online, home and stores, we are fulfilling our purpose to help enrich people’s lives through technology while also helping technology companies commercialize their product innovations.”
Domestic and international divisions
Domestic revenue came in at $ 13.85 billion in the fourth quarter, up 2.4% year-over-year on the back of robust comps growth of 3.4%. This was only partly offset by the revenue loss from store closures in the previous year. Online revenue stood at $3.52 billion, which reflected 18.7% growth from the same period last year. Higher average order values drove the increase.
On the international front, revenue surged 3.4% year-over-year to $1.35 billion in the fourth quarter. The revenue growth reflected the positive impact of foreign currency exchange rates as well as comps growth of 1.6%, which was due to strong sales in Canada.
Key insights
In the holiday period, the retailer offered next-day delivery on many items irrespective of the minimum purchase amount or membership. In addtion, customers were permitted to pick their orders up in-store within an hour of placing the order online.
Best Buy also made efforts to grow its tech support business during the quarter. This is evident from the fact that the company now helps customers to install a smart doorbell, mount a TV and fix a computer defect in exchange for a yearly Total Tech Support membership fee of $199.99.
The company has also increased its presence in the healthcare arena by acquiring several healthcare companies such as GreatCall, which is a connected health technology company and an emergency response services provider for senior citizens.
Guidance
Best Buy has provided guidance for fiscal 2021. Adjusted earnings per share are projected to be between $6.10 and $6.30. Comps are expected to be 2% or less. The company anticipates revenue in the range of $43.3 billion and $44.3 billion.
Disclosure: I do not hold any positions in the stocks mentioned.
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