Best Buy on Thursday did not meet Wall Street sales expectations for the fourth quarter, as some popular holiday items ran out and store hours were reduced due to a shortage of Omicron-related staff.
Shares rose about 6% in pre-market trading, as investors’ forecasts were lower than expected in the short term, but a rosier picture than executives. Best Buy avoids challenging comparisons during the year, when the pandemic and incentive checks boost sales. The company will hold a virtual investor day on Thursday.
CEO Corey Barry said in a press release that the company was facing limited inventories during the three-month period. However, she said the retailer has reached its fastest delivery times over the holidays and has focused on key areas of growth such as its membership program, Totaltech and the healthcare business.
She said company leaders “deliberately invest in our future and encourage our competitive differentiation”, even if it weighs on short-term profits.
Here’s how the company did for its fiscal fourth quarter of 2022, which ended on January 29, compared to what Wall Street expected, based on a survey by analysts at Refinitiv:
- Earnings per share: $ 2.73 adjusted for expected $ 2.73
- income: $ 16.37 billion against the expected $ 16.6 billion
Best Buy’s net profit fell to $ 626 million, or $ 2.62 per share, from $ 816 million, or $ 3.10 per share, a year earlier.
Excluding items, it earned $ 2.73 per share, equivalent to the $ 2.73 expected by analysts polled by Refinitiv.
Net sales fell to $ 16.37 billion from $ 16.94 billion a year earlier, with estimates of $ 16.6 billion missing.
Sales in the same store fell 2.3% during the quarter, which exceeded the expectations of both the company and analysts. Analysts expected sales in the same store to fall by 0.9%, and the company predicts that they will range from a 2% decline to 1% growth.
Best Buy noted a jump in sales and stock prices during the pandemic as it cared for Americans’ needs, such as additional computer monitors and printers for home use, cooking appliances for more dining and home theater systems and game consoles to spend time. Now some investors are betting that the retailer’s sales will fall or fall when people return to the office and choose personal gatherings instead of sitting behind screens.
Shares of the company closed at $ 100.84 on Wednesday, up 3.77%. Its market value is about 24 billion dollars.
Best Buy has dealt with difficulties in recent quarters, including chip shortages, surges in commodity costs and delays in goods shipped from other parts of the globe.
Next year, Best Buy said it expected revenue of between $ 49.3 billion and $ 50.8 billion, below analysts’ expected $ 51.05 billion, according to Refinitiv. He predicts that adjusted earnings per share will be between $ 8.85 and $ 9.15 for the full year, lower than analysts’ expectations of $ 9.16, according to Refinitiv.
The company said it expects sales in the same store to shrink further from 1% to 4% next year. This is compared to analysts’ expected decline of 1.4%, according to StreetAccount.
In a press release, CFO Matt Bilunas said Best Buy had a lower short-term outlook as a period of very high demand followed. However, as it looks over the next few years, he said the company expects demand to return to levels higher than sales before the pandemic.
On Thursday, Best Buy leaders will explain in detail the company’s strategy to overcome the pandemic. He launched an annual membership program that provides recurring revenue for the company and benefits such as technical support for customers. It is pursuing growth in other categories, including related fitness, smart home and healthcare.
The company announced a 26% increase in its quarterly dividend on Thursday. He said he would spend about $ 1.5 billion to buy back shares next year.
Read the company’s earnings announcement here.
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