Best Buy reported mixed financial results for its holiday quarter, with sales declining and missing Wall Street expectations, but earnings surpassed estimates due to improved profitability.
Shares for the consumer electronics retailer rose over 10% in premarket trading following the announcement.
Fiscal Fourth Quarter Performance
For the three-month period ending January 31, Best Buy's net income increased to $541 million, or $2.56 per share, compared to $117 million, or 54 cents per share, in the previous year's quarter.
Adjusted earnings per share were $2.61, exceeding analyst expectations of $2.47.
Revenue for the quarter was $13.81 billion, slightly below the anticipated $13.88 billion and a decrease from $13.95 billion in the same quarter last year.
Comparable sales, which track online and in-store sales for locations open at least 14 months, declined by 0.8%. This was attributed to softer sales in appliances and home theaters, partially offset by growth in computing and mobile phone sales.
Full Fiscal Year Outlook
Best Buy projects full fiscal year revenue to range between $41.2 billion and $42.1 billion. The company anticipates adjusted earnings per share between $6.30 and $6.60.
Comparable sales are expected to range from a 1% decline to a 1% increase for the current fiscal year.
Management Commentary and Market Factors
CEO Corie Barry noted that demand for consumer electronics remained subdued during the holiday season but indicated Best Buy's market share was at least flat. CFO Matt Bilunas acknowledged a mixed macroeconomic environment.
The company has attributed slower sales over the past four years to price-sensitive U.S. consumers, a slower housing market, and less tech innovation, which have led some shoppers to delay purchases of big-ticket items. Higher tariffs on imported electronics have also impacted costs.
Profitability Initiatives
Best Buy has focused on more profitable business areas, including selling advertisements and expanding its third-party marketplace, which launched in August.
The company reported a near doubling of advertising partners and a significant increase in products available on the marketplace compared to the prior year.