Electronics retailer Best Buy (NYSE:BBY) reported revenue ahead of Wall Street’s expectations in Q4 CY2024, but sales fell by 4.8% year on year to $13.95 billion. The company expects the full year’s revenue to be around $41.8 billion, close to analysts’ estimates. Its non-GAAP profit of $2.58 per share was 7.2% above analysts’ consensus estimates.
Revenue: $13.95 billion vs analyst estimates of $13.67 billion (4.8% year-on-year decline, 2% beat)
Adjusted EPS: $2.58 vs analyst estimates of $2.41 (7.2% beat)
Adjusted EBITDA: $572 million vs analyst estimates of $871.2 million (4.1% margin, 34.3% miss)
Management’s revenue guidance for the upcoming financial year 2026 is $41.8 billion at the midpoint, in line with analyst expectations and implying 0.7% growth (vs -4.4% in FY2025)
Adjusted EPS guidance for the upcoming financial year 2026 is $6.40 at the midpoint, missing analyst estimates by 3.1%
Operating Margin: 1.6%, down from 3.8% in the same quarter last year
Free Cash Flow Margin: 9.7%, up from 6.8% in the same quarter last year
Same-Store Sales were flat year on year (-4.8% in the same quarter last year)
Market Capitalization: $18.54 billion
Company Overview
With humble beginnings as a stereo equipment seller, Best Buy (NYSE:BBY) now sells a broad selection of consumer electronics, appliances, and home office products.
Electronics & Gaming Retailer
After a long day, some of us want to just watch TV, play video games, listen to music, or scroll through our phones; electronics and gaming retailers sell the technology that makes this possible, plus more. Shoppers can find everything from surround-sound speakers to gaming controllers to home appliances in their stores. Competitive prices and helpful store associates that can talk through topics like the latest technology in gaming and installation keep customers coming back. This is a category that has moved rapidly online over the last few decades, so these electronics and gaming retailers have needed to be nimble and aggressive with their e-commerce and omnichannel investments.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
With $41.53 billion in revenue over the past 12 months, Best Buy is larger than most consumer retail companies and benefits from economies of scale, enabling it to gain more leverage on its fixed costs than smaller competitors. This also gives it the flexibility to offer lower prices. However, its scale is a double-edged sword because there are only a finite number of places to build new stores, making it harder to find incremental growth. To accelerate sales, Best Buy likely needs to lean into pricing or international expansion.
As you can see below, Best Buy struggled to increase demand as its $41.53 billion of sales for the trailing 12 months was close to its revenue five years ago (we compare to 2019 to normalize for COVID-19 impacts). This was mainly because it didn’t open many new stores and observed lower sales at existing, established locations.
Best Buy Quarterly Revenue
This quarter, Best Buy’s revenue fell by 4.8% year on year to $13.95 billion but beat Wall Street’s estimates by 2%.
Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. While this projection implies its newer products will spur better top-line performance, it is still below average for the sector.
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Store Performance
Number of Stores
A retailer’s store count often determines how much revenue it can generate.
Over the last two years, Best Buy has kept its store count flat while other consumer retail businesses have opted for growth.
When a retailer keeps its store footprint steady, it usually means demand is stable and it’s focusing on operational efficiency to increase profitability.
Note that Best Buy reports its store count intermittently, so some data points are missing in the chart below.
Best Buy Operating Locations
Same-Store Sales
A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales gives us insight into this topic because it measures organic growth for a retailer's e-commerce platform and brick-and-mortar shops that have existed for at least a year.
Best Buy’s demand has been shrinking over the last two years as its same-store sales have averaged 4.9% annual declines. This performance isn’t ideal, and we’d be concerned if Best Buy starts opening new stores to artificially boost revenue growth.
Best Buy Same-Store Sales Growth
In the latest quarter, Best Buy’s year on year same-store sales were flat. This performance was a well-appreciated turnaround from its historical levels, showing the business is improving.
Key Takeaways from Best Buy’s Q4 Results
It was encouraging to see Best Buy beat analysts’ revenue and EPS expectations this quarter. On the other hand, its EBITDA missed significantly and its full-year EPS guidance fell short of Wall Street’s estimates. Overall, this quarter could have been better, but the stock traded up 2.6% to $89.06 immediately following the results due to the better-than-anticipated top-line performance.
