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Mayank Marwah
Mayank Marwah
Articles (1054) 

Best Buy Posts 4th-Quarter Earnings Beat, But Recorded a Slowdown in Sales

Retailer's shares fall as it expects pace of sales growth to decline

February 25, 2021 | About:

Best Buy Co. Inc. (NYSE:BBY) released its fourth-quarter and full year earnings results for fiscal 2021 before the opening bell on Feb. 25.

The consumer electronics retailer surpassed analysts' earnings projections thanks to strong digital performance. However, it missed the quarterly revenue forecast due to a slowdown in the pace of sales growth.

The company's shares plunged 5.25% in premarket trading to $107.50 per share following the earnings announcement.

The key numbers

The Richfield, Minnesota-based company posted adjusted earnings per share of $3.48, topping estimates of $3.45. Revenue surged 11.4% from the prior-year quarter to $16.94 billion. Analysts had anticipated revenue of $17.23 billion.

Comparable store sales climbed 12.6% in the reported quarter, which was less than the anticipated growth of 14.7%. The comps growth was attributed to strong sales of computing, tablets and appliances, which more than offset the decline in mobile phones and flat sales at home theatre.

CEO Corie Barry had the following to say:

"During the fourth quarter, our teams delivered an exceptional customer experience in a safe environment. They showed amazing flexibility managing extraordinary volume in a dynamic environment. Online sales grew almost 90% to a record $6.7 billion and made up 43% of our total Domestic sales. Our stores played a pivotal role in the fulfillment of these sales, as almost two-thirds of our online revenue was either picked up in store or curbside, shipped from a store or delivered by a store employee. I want to thank our associates across the company for their dedication, ingenuity and resilience in a constantly changing environment."

Domestic and international comps

Domestic revenue stood at $15.40 billion, up 11.2% year over year as comps growth of 12.4% was only partially negated by the revenue loss from store closures in the previous year. Online revenue was $6.66 billion, which reflected 89.3% growth from the same period of last year. Higher conversion rates and increased traffic drove the increase.

On the international front, revenue inched up 14% to $1.54 billion, primarily due to comps growth of 14.9% coupled with favorable impact of foreign currency exchange rates. The GAAP gross profit rate of 21.6% was down from 22.6% recorded last year.

What's ahead?

Following mixed quarterly results, the retailer has warned that the pace of sales growth could fall in the quarters ahead, although it expects to grow by this time next year. In addition, the company said its expenses will rise going forward, given that all its stores are back open.

The company mentioned that its capital spending for the fiscal year 2022 will be around $750 million to $850 million. The company will also repurchase at least $2 billion worth of its own shares. It estimates that its comps will fall in the -2% to +1% range. Best Buy also projected that its digital sales will make up nearly 40% of total domestic sales.

Disclosure: I do not hold any positions in the stocks mentioned.

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About the author:

Mayank Marwah
A seasoned writer with keen interest in the automotive, technology, telecommunication, retail and aerospace sectors.

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