Best Buy warns of declining CE sales; to expand outlet store footprint

Best Buy Co. reported fourth-quarter earnings and sales that beat expectations but offered weak full-year guidance.

On the company’s earnings call, CEO Corie Barry said plans for this year include the closing of 20 to 30 larger format stores and the opening of approximately 10 outlet stores. Best Buy will also remodel eight stores to its Experience format.

The company will also reduce selling space in some of its stores in order to expand backroom space.

“Our stores have multiple purposes now and a larger backroom provides better support for other capabilities like our high rate of in-store pickup of online orders,” Barry told investors.

Best Buy’s net income fell to $495 million, or $2.23 per share, for the quarter ended Jan. 28, from $626 million, or $2.62 per share, in the year-ago period. Adjusted earnings per share were $2.61, way ahead of analysts estimates of $2.10 per share.

Revenue fell 10.0% to $14.735 billion, above estimates of $14.721 billion. Same-store sales fell 9.3%. Growth in gaming and tablets was offset by declines in home theater, appliances and mobile phones. 

“Throughout Q4 and FY23, we remained committed to balancing our near-term response to current conditions and managing well what is in our control, while also advancing our strategic initiatives and investing in areas important for our long-term performance,” stated Barry in the earnings release. “We believe the macro and industry backdrop will continue to be pressured in FY24 and we will continue to adjust. Our initiatives to deliver our omnichannel retail model evolution, build customer relationships through membership, and remove cost and improve efficiency and effectiveness will allow us to deliver even more experiences no one else can and capitalize on the opportunities ahead of us.”

For fiscal 2024, the company expects adjusted earnings per share $5.70 to $6.50, with revenue of $43.8 billion to $45.2 billion. It expects same-store sales to fall 3.0% to 6.0%. Best Buy’s guidance was all below what analysts were expecting.

“As we enter FY24, the consumer electronics industry continues to feel the effects of the broader macro environment and its impact on consumers,” said CFO Matt Bilunas. “As a result, our outlook assumes comparable sales decline 3% to 6% for the year, with the most sales pressure in the first quarter, as year-over-year comparisons ease through the year.”