Release Date: March 04, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Best Buy Co Inc (BBY, Financial) reported better-than-expected sales and earnings for the fourth quarter, with positive enterprise comparable sales growth of 0.5%.
- Digital sales accounted for almost 40% of total domestic sales in Q4, with significant growth in app engagement and traffic.
- The company saw strong customer response to early Black Friday sales and doorbusters, contributing to a strong start to the holiday quarter.
- Best Buy Co Inc (BBY) achieved a 9% domestic comparable sales growth in computing and tablet categories, with laptop sales growth increasing to 10%.
- The company reported its lowest employee turnover metrics in six years, attributed to investments in onboarding, training, and creating a stable work environment.
Negative Points
- Best Buy Co Inc (BBY) experienced a 2.3% comparable sales decline on a 52-week basis, indicating a softer sales environment.
- The company faced declines in product categories such as appliances, home theater, and gaming.
- The fiscal '26 guidance does not include the impact of recently enacted tariffs, which could negatively affect sales and profitability.
- Best Buy Co Inc (BBY) recorded a $475 million goodwill impairment related to Best Buy Health, reflecting downward revisions in longer-term projections.
- The company expects its first quarter comparable sales to be slightly down versus last year, with a 40 basis point decline in adjusted operating income rate.
Q & A Highlights
Q: How will the 10% tariff from China impact Best Buy's sales and earnings?
A: Matthew Bilunas, CFO, explained that the 10% tariff could result in a 1% negative impact on comparable sales, assuming a portion of costs are passed on by vendors. The impact on earnings per share is not directly linear, as the company is also investing in future initiatives. Corie Barry, CEO, added that the situation is complex and unprecedented, making precise predictions difficult.
Q: What flexibility does Best Buy have in its supply chain to mitigate the impact of tariffs?
A: Corie Barry, CEO, stated that Best Buy is working closely with vendors to understand SKU-level impacts and is reviewing supply chain adjustments. The company has already diversified its exclusive brands manufacturing and is analyzing pricing impacts. Best Buy is also engaging with policymakers and industry partners to navigate the situation.
Q: How did Best Buy's Q4 performance compare to the industry, and what are the expectations for gaming in fiscal '26?
A: Corie Barry, CEO, mentioned that Best Buy's Q4 share was flattish compared to last year, with gains in computing and gaming. For fiscal '26, the company expects opportunities in gaming, especially with new product launches and enhancements in stores.
Q: What are the expectations for Best Buy's Marketplace and Ads initiatives?
A: Matthew Bilunas, CFO, indicated that both Marketplace and Ads are expected to contribute to EBIT dollars and rate expansion in the future. Marketplace will launch midyear, and Ads will focus on agency growth and technology scaling. Both initiatives are seen as key drivers for future profit growth.
Q: How is Best Buy approaching pricing in light of tariffs, and what is the impact on earnings guidance?
A: Corie Barry, CEO, explained that pricing adjustments will depend on vendor cost pass-throughs and competitive dynamics. The company aims to remain competitive across price points. Matthew Bilunas, CFO, noted that while precise EPS impact is uncertain, Best Buy will mitigate effects without compromising long-term growth potential.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
