Dive Brief:
- Best Buy’s fourth-quarter revenue fell 4.7% year over year to $13.9 billion, while comparable sales rose 0.5%, the company reported Tuesday. Domestic revenue fell 5% to $12.7 billion.
- The company saw operating income decline 61.3% from the year-ago period to $217 million and net income fall about 75% to $117 million.
- For the full year, revenue fell 4.4% year over year to $41.5 billion, while comps declined 2.3%. Operating income fell nearly 20% to $1.3 billion and net earnings declined 25% year over year to $927 million.
Dive Insight:
Although Best Buy’s Q4 performance beat analyst and company expectations, the first quarter and fiscal year are uncertain as tariffs are likely to drive up prices for consumer electronics, CEO Corie Barry said during a Tuesday earnings call.
President Trump on Tuesday implemented 20% tariffs on Chinese products and 25% tariffs on Canadian and Mexican imports. The move is likely to affect Best Buy, and by extension, consumers, on some level, Barry said.
“The consumer electronics supply chain is highly global, technical, and complex,” Barry said according to a call transcript. “China and Mexico remain the No. 1 and No. 2 sources for products we sell, respectively. While Best Buy only directly imports 2% to 3% of our overall assortment, we expect our vendors across our entire assortment will pass along some level of tariff costs to retailers, making price increases for American consumers highly likely.”
Best Buy issued guidance for the upcoming fiscal year that forecasts revenue ranging from $41.4 billion to $42.2 billion and comparable sales ranging from flat to 2%. But the company said its latest fiscal outlook doesn’t reflect the effects of Tuesday’s tariff decision because there’s still uncertainty about the details and the response it will draw from U.S. consumers and international trading partners.
However, Barry said based on the company’s analysis, if the 10% tariffs on Chinese products that began last month remained in effect for the rest of this year, comp sales would be negatively impacted.
Barry said the company is continuing to refine its physical footprint. She said the company closed 12 traditional big-box format stores in the U.S. and opened two new stores. This year, Barry said the company plans to close five to 10 stores and open “a few” smaller format stores.
The company plans to continue its rollout of dedicated spaces to showcase new tech. Barry also said that the company’s three-tiered membership and loyalty program currently has nearly 8 million paid members — up from 7 million last year — and about 100 million overall across all tiers.
Still, Best Buy faces rising competition from other big-box stores like Walmart or Lowe’s encroaching on its territory, Neil Saunders, managing director of GlobalData, said in emailed comments. While Best Buy is on the right track by working to make its stores destination spaces, Saunders said the retailer should better communicate the value of its digital shopping offering.
Looking ahead, he said the company’s guidance for Q1, which anticipates negative comps with growth possible for the following quarters suggests that Best Buy’s decline may be bottoming out. “As a brand, Best Buy is well regarded,” Saunders said. “It is also trusted. So, in our view, there is a very solid base from which to build.”
