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Best Buy (BBY) Q4 Earnings Beat Estimates, Sales Dip Y/Y
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Best Buy Co., Inc. (BBY - Free Report) has reported fourth-quarter fiscal 2024 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. While revenues decreased year over year, earnings improved from the year-ago period. Throughout the fourth quarter and fiscal 2024, the company showcased a robust operational performance despite facing a challenging consumer electronics sales environment.
Best Buy Co., Inc. Price, Consensus and EPS Surprise
Best Buy’s adjusted earnings of $2.72 per share beat the Zacks Consensus Estimate of $2.51. The bottom line increased from $2.61 in the year-ago period.
Enterprise revenues declined 0.6% from the prior fiscal year’s quarterly number to $14,646 million. Nonetheless, the figure surpassed the Zacks Consensus Estimate of $14,516 million. Enterprise comparable sales dropped 4.8% year over year. Notably, this figure was narrower than the 9.3% decline reported in the year-ago quarter.
Gross profit increased 2.1% year over year to $3,001 million, while the gross margin expanded 50 basis points (bps) to 20.5%. The metric marginally beat our estimate of 20.3%. Adjusted operating income came in at $735 million, up from $704 million in the year-ago quarter. The adjusted operating margin increased 20 bps to 5%. We anticipated an adjusted operating margin of 4.8%.
We note that adjusted SG&A expenses increased 1.3% year over year to $2,266 million, whereas the same increased 30 bps to 15.5% as a percentage of revenues. We expected a deleverage of 20 basis points in SG&A expenses as a percentage of revenues.
Image Source: Zacks Investment Research
Segmental Details
The Domestic segment’s revenues fell 0.9% to $13,410 million. This decline from the last fiscal year’s quarterly reading was mainly induced by a comparable sales decrease of 5.1%. From a merchandising perspective, there was a decline in comparable sales across several categories, mainly driven by decreases in home theater, appliances, mobile phones, and tablets. This downturn was somewhat mitigated by an increase in gaming sales. We expected a 0.6% decline in Domestic segment revenues.
The Domestic segment’s online revenues of $5.1 billion declined 4.8% year over year on a comparable basis. As a percentage of total domestic revenues, online revenues were 38%, flat year over year.
The segment’s gross margin increased 60 bps to 20.4% due to enhanced financial results from the company's membership programs, which saw higher margins from services, and a better gross profit rate stemming from the company's Health initiatives.
In the International segment, revenues increased 2.7% year over year to $1,236 million, faring better than our estimate of $1,173.3 million. This growth was largely fueled by an additional $60 million in revenues from an extra week. However, this increase was somewhat offset by a 1.4% decline in comparable sales and the adverse effects of foreign currency exchange rates. The segment’s operating income came in at $57 million or 4.6% of revenues, lower than the $72 million or 6% of revenues reported in the year-ago quarter.
This segment’s gross margin declined 70 basis points to 21% primarily on unfavorable product margin rates.
Other Details
Best Buy ended the quarter with cash and cash equivalents of $1,447 million, long-term debt of $1,152 million and a total equity of $3,053 million.
At the end of the reported quarter, merchandise inventories of $4,958 million decreased 3.7% from the year-ago quarter.
In the fiscal fourth quarter, BBY returned about $268 million to its shareholders via dividends of $198 million and share repurchases of $70 million. Throughout the year, the company distributed $1.1 billion to its shareholders, which included $801 million in dividends and $340 million in share buybacks.
The company’s board of directors has sanctioned a 2% hike in its regular quarterly dividend, setting it at 94 cents per share. This upcoming dividend is payable on Apr 11, 2024, to shareholders of record as of Mar 21, 2024.
Guidance
For fiscal 2025, including 52 weeks, management projects revenues of $41.3-$42.6 billion and a comparable sales decline of 3-0%. The company had reported consolidated revenues of $43.5 billion, with a comparable sales decline of 6.8% in fiscal 2024.
The company expects an adjusted operating margin of 3.9-4.1% for fiscal 2025, whereas it reported 4.1% in fiscal 2024. It expects adjusted earnings per share between $5.75 and $6.20, whereas it reported $6.37 in fiscal 2024. Capital expenditure is anticipated to be $750-$800 million.
For the first quarter of fiscal 2025, Best Buy anticipates a year-over-year comparable sales decline of 5%. The adjusted operating income rate is expected to be 3.4%, suggesting no change from the year-ago reported figure.
Fiscal 2025 consists of 52 weeks, in contrast to the 53 weeks in fiscal 2024. The company calculates that the additional week in fiscal 2024 contributed roughly $735 million to its annual revenues. This extra week added about 15 basis points to the adjusted operating margin in the year and approximately 30 cents to adjusted earnings per share.
Over the past three months, this Zacks Rank #3 (Hold) stock has gained 19.4% compared with the industry’s 9% growth.
Stocks to Consider
Some better-ranked stocks from the same space are Abercrombie & Fitch Co. (ANF - Free Report) , American Eagle Outfitters, Inc. (AEO - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) .
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year sales indicates growth of 15% from the fiscal 2022 reported figure. ANF has a trailing four-quarter average earnings surprise of 713%.
American Eagle Outfitters is a specialty retailer of casual apparel, accessories and footwear. The company flaunts a Zacks Rank of 1 at present.
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year earnings and sales indicates growth of 45.4% and 5.2%, respectively, from the fiscal 2022 reported figures. AEO has a trailing four-quarter average earnings surprise of 23%.
Deckers Outdoor is a leading designer, producer and brand manager of innovative, niche footwear and accessories. The company currently sports a Zacks Rank #1. DECK has a trailing four-quarter earnings surprise of 32.1%, on average.
The Zacks Consensus Estimate for Deckers Outdoor’ current fiscal-year earnings and sales indicates growth of 38.6% and 15.7%, respectively, from the fiscal 2023 reported figures.
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Best Buy (BBY) Q4 Earnings Beat Estimates, Sales Dip Y/Y
Best Buy Co., Inc. (BBY - Free Report) has reported fourth-quarter fiscal 2024 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. While revenues decreased year over year, earnings improved from the year-ago period. Throughout the fourth quarter and fiscal 2024, the company showcased a robust operational performance despite facing a challenging consumer electronics sales environment.
Best Buy Co., Inc. Price, Consensus and EPS Surprise
Best Buy Co., Inc. price-consensus-eps-surprise-chart | Best Buy Co., Inc. Quote
Q4 Details
Best Buy’s adjusted earnings of $2.72 per share beat the Zacks Consensus Estimate of $2.51. The bottom line increased from $2.61 in the year-ago period.
Enterprise revenues declined 0.6% from the prior fiscal year’s quarterly number to $14,646 million. Nonetheless, the figure surpassed the Zacks Consensus Estimate of $14,516 million. Enterprise comparable sales dropped 4.8% year over year. Notably, this figure was narrower than the 9.3% decline reported in the year-ago quarter.
Gross profit increased 2.1% year over year to $3,001 million, while the gross margin expanded 50 basis points (bps) to 20.5%. The metric marginally beat our estimate of 20.3%. Adjusted operating income came in at $735 million, up from $704 million in the year-ago quarter. The adjusted operating margin increased 20 bps to 5%. We anticipated an adjusted operating margin of 4.8%.
We note that adjusted SG&A expenses increased 1.3% year over year to $2,266 million, whereas the same increased 30 bps to 15.5% as a percentage of revenues. We expected a deleverage of 20 basis points in SG&A expenses as a percentage of revenues.
Image Source: Zacks Investment Research
Segmental Details
The Domestic segment’s revenues fell 0.9% to $13,410 million. This decline from the last fiscal year’s quarterly reading was mainly induced by a comparable sales decrease of 5.1%. From a merchandising perspective, there was a decline in comparable sales across several categories, mainly driven by decreases in home theater, appliances, mobile phones, and tablets. This downturn was somewhat mitigated by an increase in gaming sales. We expected a 0.6% decline in Domestic segment revenues.
The Domestic segment’s online revenues of $5.1 billion declined 4.8% year over year on a comparable basis. As a percentage of total domestic revenues, online revenues were 38%, flat year over year.
The segment’s gross margin increased 60 bps to 20.4% due to enhanced financial results from the company's membership programs, which saw higher margins from services, and a better gross profit rate stemming from the company's Health initiatives.
In the International segment, revenues increased 2.7% year over year to $1,236 million, faring better than our estimate of $1,173.3 million. This growth was largely fueled by an additional $60 million in revenues from an extra week. However, this increase was somewhat offset by a 1.4% decline in comparable sales and the adverse effects of foreign currency exchange rates. The segment’s operating income came in at $57 million or 4.6% of revenues, lower than the $72 million or 6% of revenues reported in the year-ago quarter.
This segment’s gross margin declined 70 basis points to 21% primarily on unfavorable product margin rates.
Other Details
Best Buy ended the quarter with cash and cash equivalents of $1,447 million, long-term debt of $1,152 million and a total equity of $3,053 million.
At the end of the reported quarter, merchandise inventories of $4,958 million decreased 3.7% from the year-ago quarter.
In the fiscal fourth quarter, BBY returned about $268 million to its shareholders via dividends of $198 million and share repurchases of $70 million. Throughout the year, the company distributed $1.1 billion to its shareholders, which included $801 million in dividends and $340 million in share buybacks.
The company’s board of directors has sanctioned a 2% hike in its regular quarterly dividend, setting it at 94 cents per share. This upcoming dividend is payable on Apr 11, 2024, to shareholders of record as of Mar 21, 2024.
Guidance
For fiscal 2025, including 52 weeks, management projects revenues of $41.3-$42.6 billion and a comparable sales decline of 3-0%. The company had reported consolidated revenues of $43.5 billion, with a comparable sales decline of 6.8% in fiscal 2024.
The company expects an adjusted operating margin of 3.9-4.1% for fiscal 2025, whereas it reported 4.1% in fiscal 2024. It expects adjusted earnings per share between $5.75 and $6.20, whereas it reported $6.37 in fiscal 2024. Capital expenditure is anticipated to be $750-$800 million.
For the first quarter of fiscal 2025, Best Buy anticipates a year-over-year comparable sales decline of 5%. The adjusted operating income rate is expected to be 3.4%, suggesting no change from the year-ago reported figure.
Fiscal 2025 consists of 52 weeks, in contrast to the 53 weeks in fiscal 2024. The company calculates that the additional week in fiscal 2024 contributed roughly $735 million to its annual revenues. This extra week added about 15 basis points to the adjusted operating margin in the year and approximately 30 cents to adjusted earnings per share.
Over the past three months, this Zacks Rank #3 (Hold) stock has gained 19.4% compared with the industry’s 9% growth.
Stocks to Consider
Some better-ranked stocks from the same space are Abercrombie & Fitch Co. (ANF - Free Report) , American Eagle Outfitters, Inc. (AEO - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) .
Abercrombie & Fitch is a specialty retailer of premium, high-quality casual apparel. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year sales indicates growth of 15% from the fiscal 2022 reported figure. ANF has a trailing four-quarter average earnings surprise of 713%.
American Eagle Outfitters is a specialty retailer of casual apparel, accessories and footwear. The company flaunts a Zacks Rank of 1 at present.
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year earnings and sales indicates growth of 45.4% and 5.2%, respectively, from the fiscal 2022 reported figures. AEO has a trailing four-quarter average earnings surprise of 23%.
Deckers Outdoor is a leading designer, producer and brand manager of innovative, niche footwear and accessories. The company currently sports a Zacks Rank #1. DECK has a trailing four-quarter earnings surprise of 32.1%, on average.
The Zacks Consensus Estimate for Deckers Outdoor’ current fiscal-year earnings and sales indicates growth of 38.6% and 15.7%, respectively, from the fiscal 2023 reported figures.