Best Buy (BBY -3.53%), a leading consumer electronics retailer, reported its fourth-quarter results on March 4, 2025.
The company outperformed analyst estimates with an adjusted earnings per share (EPS) of $2.58 against a forecast of $2.40. Revenue came in at $13.95 billion, surpassing the expected $13.68 billion. This positive performance was driven by strong holiday sales, particularly in the computing segment. Despite this, the quarter was marred by a $475 million goodwill impairment charge related to its health division, posing weaker long-term business prospects.
Overall, Best Buy closed the quarter with solid sales, though facing ongoing sector-specific challenges.
| Metric | Q4 FY25 (13 Weeks) | Q4 FY25 Estimate | Q4 FY24 (14 Weeks) | Y/Y Change |
|---|---|---|---|---|
| Adjusted EPS | $2.58 | $2.40 | $2.72 | (5.1%) |
| Revenue | $13.95B | $13.68B | $14.65B | (4.8%) |
| Operating Margin | 4.9% | N/A | 5.1% | (0.2 pp) |
| Comparable Store Sales % Change | 0.5% | N/A | (4.8%) | (5.3 pp) |
Source: SEC filings. Analyst estimates for the quarter provided by FactSet. PP = percentage points.
Best Buy, founded as Sound of Music by Richard Schulze, is known for selling electronics, appliances, and a range of technology services. It is renowned for both its retail stores and its online presence, which together form a critical aspect of its omnichannel strategy. This strategy integrates in-store, online, and in-home services, offering versatile shopping options that boost customer satisfaction and sales.
Key to its strategy is managing vendor relationships effectively, with strong ties to major brands like Apple and Samsung. These partnerships allow Best Buy to secure preferable product terms and supply arrangements. As it navigates fluctuating consumer demand, vendor relationships and inventory management play pivotal roles in its operations.
During the quarter, strong performance was observed in computing, leading to sales that exceeded expectations by $268 million or 2%. This growth contributed to a comparable store sales increase of 0.5% compared to a decline of 4.8% in the prior year. Online sales saw a 2.6% growth, demonstrating Best Buy’s effective leveraging of its omnichannel strategy.
Despite these successes, the domestic segment saw a revenue decline of 5.2% to $12.72 billion, partially due to the extra week in the comparative previous-year period. However, a marginal increase of 0.2% in comparable sales was bolstered by effective inventory management in computing and tablets.
A notable hiccup was the $475 million goodwill impairment linked to its health division, reflecting revised forecasts and indicating potential struggles in extracting expected future cash flows from this sector.
Internationally, revenue remained stable, decreasing slightly by 0.2% to $1.23 billion, but comparable sales increased by 3.8%. New store formats in Canada and reduced supply chain costs helped stabilize this segment.
For fiscal year 2026, Best Buy anticipates revenues between $41.4 billion and $42.2 billion, with flat to 2% comparable sales growth. Additionally, it expects an adjusted EPS between $6.20 and $6.60, reflecting a slight downturn from the current year. CFO Matt Bilunas noted consumer caution amid high inflation but remains optimistic about consumer spending on high-price items driven by necessity or innovation.
Investors should note areas like the health division for further developments and Best Buy’s execution on high-margin service expansions. The company’s ability to stick to its strategic pillars will be crucial, with a focus on its omnichannel capabilities and vendor relationships continuing to steer toward profitable sales growth.
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