• by Sarah Mahoney  @mahoney_sarah, March 3, 2024

In results that beat expectations, Best Buy found plenty to be upbeat about, including impressive results in its new membership program. Still, the fourth quarter of the fiscal year was challenging, with comparable sales falling 4.8%. For the quarter, revenue came in at $14.65 billion, down from $14.74 billion in the year-ago period, with the steepest declines in domestic stores. And net earnings slipped to $460 million, from $495 million in the year-ago period.

Corie Barry, Best Buy’s chief executive officer, used the earnings announcement to call attention to the company’s ability to deliver above-forecast profits while improving customer experience and building its membership base.

In a conference call webcast for investors, she detailed extensive plans to refresh and revamp stores as the company prepares for what many believe will be a period of increased electronics purchases as consumers enter replacement cycles on phones, TVs and computers.

“We expect this to be a year of increasing industry stabilization,” she said. “We are optimistic that several indicators will continue to show favorability this year. These include decreasing inflation, leading to the lowering of interest rates, continued low unemployment, encouraging trends in consumer confidence, and the beginnings of a housing market rebound. We remain confident that our industry will grow again after two years of decline.”

The company will spend an additional $50 million on marketing in the new fiscal year.

Still, Best Buy offered a subdued outlook for the year ahead, forecasting total sales of between $41.3 billion, which would mean a decline of 3%, and $42.6 billion, which would be flat. It anticipates a 5% decline in the coming quarter.

And as the retailer continues to test various sizes and formats, it will focus on wide-scale refreshing. “We plan to touch every store in the chain in some fashion, improving both our merchandising and ease of shopping for customers,” Barry said.

Best Buy is also adding fully dedicated, certified employees in critical categories, such as TVs and appliances, hoping to boost sales and customer satisfaction.

Analysts continue to be impressed with how the Minneapolis-based company navigates a tricky environment.

“We very much admire the efforts of Best Buy senior leadership to manage well a difficult sector and macro backdrop and continue to drive profitability and cash, despite ongoing top-line challenges,” writes Brian Nagel, an analyst who follows the company for Oppenheimer & Co. “It represents a model digitally driven enterprise.”

But while he, too, is optimistic about longer-term sales gains, “we continue to recommend clients remain on the sidelines, until clearer evidence of sales re-acceleration emerges.”