Yahoo Finance Best Buy's (BBY) Q4 Earnings Beat, Comparable Sales Fall 9.3%
Best Buy Co., Inc. BBY posted fourth-quarter fiscal 2023 results, with the top and the bottom line declining year over year. Net revenues missed the Zacks Consensus Estimate while earnings surpassed the same.
Over the past six months, this presently Zacks Rank #3 (Hold) stock has gained 16% compared to the industry’s growth of 3.7%.
Q4 Details
Best Buy’s adjusted earnings of $2.61 per share beat the Zacks Consensus Estimate of $2.09 and our estimate of $2.00. The bottom line decreased from $2.73 recorded in the year-ago fiscal period.
Enterprise revenues declined to $14,735 million from $16,365 million reported in the year-ago quarter. The top line missed the Zacks Consensus Estimate of $14,747.5 million but surpassed our estimate of $14,600.3 million. Enterprise comparable sales dropped 9.3% compared with a drop of 2.3% seen in the year-ago fiscal quarter.
Best Buy Co., Inc. Price, Consensus and EPS Surprise
Best Buy Co., Inc. price-consensus-eps-surprise-chart | Best Buy Co., Inc. Quote
Gross profit to $2,940 million from $3,313 million reported in the year-ago quarter. Gross profit margin stood at 20%, down from 20.2% reported in the year-ago quarter.
Adjusted operating income, as a percentage of revenues, shrank to 4.8% compared with 5.1% reported in the year-ago quarter.
SG&A expenses came at $2,257 million, down from $2,505 million reported in the year-ago quarter. As a percentage of revenues, the same remained unchanged at 15.3%.
Segment Details
Domestic segment revenues fell 9.8% to $13,531 million, mainly due to a comparable sales decline of 9.6%. From a merchandising perspective, comparable sales decreased in home theater, appliances and mobile phones. These were somewhat offset by growth in the gaming and tablet categories.
Domestic online revenue stood at $5.14 billion, which declined 13% on a comparable basis. As a percentage of total Domestic revenue, online revenue was 38% compared with the year-ago quarter’s figure of 39.4%.
Domestic gross profit contracted to 19.8% owing to reduced product margin rates, somewhat offset by favorable services margin rates as well as increased profit-sharing revenue from its private label and co-branded credit card arrangement.
In the International segment, revenues fell 12.2% to $1,204 million, mainly due to a comparable sales decline of 5.7% and adverse foreign currency translations of 570 basis points (bps). The segment’s gross profit rate declined to 21.7% from 22.9%, induced by lower product margin rates, among other reasons.
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Other Details
Best Buy ended the quarter with cash and cash equivalents of $1,874 million, long-term debt of $1,160 million and total equity of $2,795 million.
At the end of the reported quarter, merchandise inventories of $5,140 million decreased from $5,965 million reported in the year-ago quarter.
During the quarter, BBY returned about $743 million to its shareholders via dividends and share repurchases. For fiscal 2023, Best Buy has returned $1.8 billion to its shareholders through share repurchases and dividends.
BBY’s board authorized a quarterly cash dividend hike to 92 cents per share, payable Apr 13, 2023, to its shareholders of record as of Mar 23.
Guidance
Best Buy anticipates fiscal 2024 revenue in the range of $43.8-$45.2 billion. For fiscal 2024, management expects a comparable sales decline of 3-6%, with significant sales pressure in the fiscal first quarter.
The company expects fiscal 2024 gross margin expansion of 40-70 bps year over year. The upside can be attributed to an evolving membership program and gains from cost optimization initiatives. For fiscal 2024, management anticipates adjusted SG&A expense to rise year over year on increased depreciation, addback of incentive compensation and an extra week. The company expects adjusted earnings per share (EPS) between $5.70 and $6.50 for fiscal 2024.
Solid Retail Bets
Some better-ranked stocks are Burlington Stores BURL, American Eagle Outfitters AEO and Abercrombie & Fitch ANF.
Burlington Stores, which operates as a retailer of branded apparel products, carries a Zacks Rank #2 (Buy). BURL has a negative trailing four-quarter earnings surprise of 0.6%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Burlington’s current financial-year sales and EPS suggests a decline of 8.2% and 52.2%, respectively, from the year-ago period.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank of 2 (Buy). AEO delivered an earnings surprise of 82.6% in the last reported quarter.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year sales and EPS suggests a decline of 1.3% and 58.9%, respectively, from the year-ago reported figures.
Abercrombie & Fitch, a leading casual apparel retailer, currently carries a Zacks Rank #2. ANF delivered an earnings surprise of 107.7% in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and EPS suggests decline of almost 1% and 93.8%, respectively, from the year-ago reported figures.
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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
Best Buy Co., Inc. (BBY) : Free Stock Analysis Report
Burlington Stores, Inc. (BURL) : Free Stock Analysis Report
