Best Buy reports 4Q sales decreased 2.3% but FY2022 showed growth

“Our teams showed remarkable execution and dedication to serving our customers throughout the important gift-giving season,” said Corie Barry, Best Buy CEO. “In Q4, we drove improvement in year-over-year customer satisfaction metrics across almost all areas, particularly for in-store, online, and chat experiences. And even with online sales at almost 40% of our Domestic revenue, we reached our fastest holiday delivery times ever, shipping products to customer homes more than 25% faster than last year and two years ago. I am truly grateful for, and continue to be impressed by, our associates’ dedication, resourcefulness, and flat-out determination.”

“Q4 sales of $16.4 billion were impacted by more constrained inventory than expected, including some high-demand holiday items, and the temporary reduction in store hours in January due to Omicron-induced staffing challenges,” she added. “We are deliberately investing in our future and furthering our competitive differentiation which, as expected, impacted our Q4 profitability. The biggest areas of investment were our new membership program, technology, and Best Buy Health, all core to our future growth potential.”

“FY22 was another record year. In addition to record revenue and earnings, our leaders drove new ways of operating and our employees worked tirelessly to meet our customers’ technology needs with excellent service,” she added. “From a financial perspective, our comparable sales growth was 10.4% on top of a very strong 9.7% last year, with revenue up $8.1 billion over the past two years. Compared to last year, our GAAP EPS was up 44% to $9.84 and our non-GAAP EPS was up 27% to $10.01.”

“In the past two years, our total cash provided by operating activities was $8.2 billion and we generated more than $6.5 billion in free cash flow,” said Matt Bilunas, Best Buy CFO. “In FY22, we returned $4.2 billion to shareholders in the form of share repurchases and dividends. Today, we are announcing a 26% increase in our quarterly dividend to $0.88 per share and our plan to spend approximately $1.5 billion in share repurchases in FY23.”

Outlook

“In FY23, we are leveraging our position of strength by continuing to invest in our future to deliver growth over the long term. While we expect sales growth and earnings to look different in FY23, our outlook for FY25 delivers strong revenue growth and operating income rate expansion well beyond FY22,” Bilunas continued. “The two largest variables in our FY23 financial outlook on a year-over-year basis are the short-term industry decline as we lap high growth and government stimulus, and the investment in our new membership program, Best Buy Totaltech, which we believe will drive longer-term value. As we look to FY25, we expect the consumer electronics industry will return to the level we saw this past year, which is much higher than pre-pandemic levels, and that Totaltech, Best Buy Health and other initiatives will drive meaningful growth.”

For the year, Best Buy is projecting revenue of $49.3 billion to $50.8 billion, with a comparable sales decline of 1.0% to 4.0%

Future changes

Best Buy is planning a rapid expansion in product categories like at-home gyms, e-bikes, outdoor grills, kitchen gadgets and other technology, according to a report in CNN Business. CEO Barry told analysts in an investor call: “We’re expanding our addressable market by entering new categories in areas like health and electric bikes that are being disrupted by technology. Forty percent of Americans use digital technology or the internet in new or different ways compared with before the pandemic.”