Best Buy Q4 Earnings Beat Estimates, Comparable Sales Rise 0.5% Y/Y

Best Buy Co., Inc. BBY has reported fourth-quarter fiscal 2025 results, wherein revenues and earnings surpassed the Zacks Consensus Estimate. However, both top and bottom lines declined year over year.

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Best Buy remains focused on strengthening its position in retail as the leading omni-channel destination for technology and expanding its operating income rate. At the same time, the company is building and scaling incremental profit streams, including Best Buy Marketplace and Best Buy Ads, which are expected to drive strong returns.

Over the past three months, this Zacks Rank #3 (Hold) company has declined 3.4% against the industry’s 0.1% growth.

Best Buy Co., Inc. Price, Consensus and EPS Surprise

Best Buy Co., Inc. price-consensus-eps-surprise-chart | Best Buy Co., Inc. Quote

Insight Into BBY’s Quarterly Performance

Adjusted earnings of $2.58 per share surpassed the Zacks Consensus Estimate of $2.40. The bottom line fell 5.1% from $2.72 per share in the year-ago period.

Enterprise revenues were $13,948 million, which dipped 4.8% from the prior-year quarter's $14,646 million. The figure beat the consensus estimate of $13,664 million. Enterprise comparable sales increased 0.5% year over year.

Gross profit dropped 2.8% year over year to $2.92 billion, while the gross margin expanded 40 basis points (bps) to 20.9%. We had projected an adjusted gross margin expansion of 20 bps.

Adjusted operating income was $690 million, down 6.1% from $735 million in the year-ago quarter. The adjusted operating margin dipped 10 bps to 4.9%.

Adjusted selling, general and administrative (SG&A) expenses were $2.23 billion, down 1.7% year over year. SG&A, as a percentage of revenues, increased 50 bps to 16%. We had estimated adjusted SG&A expenses to deleverage 40 bps.

BBY’s Domestic & International Operations

Domestic comparable sales saw a slight increase of 0.2%, while revenues declined 5.2% year over year to $12.7 billion. We expected a 6.9% decline in the Domestic segment's revenues. The revenue drop was largely attributed to an extra revenue week in the fourth quarter of fiscal 2024, which contributed approximately $675 million.

From a merchandising standpoint, the primary contributors to the comparable sales increase, on a weighted basis, were computing, tablets and services. However, these gains were partially offset by declines in appliances, home theater and gaming categories. Domestic online revenues were $5.02 billion, reflecting a 2.6% increase on a comparable basis. Online sales accounted for 39.5% of total domestic revenues, up from 38% in the previous year.

The domestic gross margin rose 50 bps year over year to 20.9%, primarily driven by improved financial performance in the company’s services segment, including its membership offerings. This increase was partially offset by a decline in profit-sharing revenues from the company’s private label and co-branded credit card programs. The segment’s adjusted operating income was $620 million, lower than the $678 million recorded last year. As a percentage of revenues, the metric declined 20 bps year over year at 4.1%.

International comparable sales grew 3.8% year over year, while revenues declined 0.2% to $1.23 billion. The revenue decrease was primarily led by the extra revenue week in the fiscal fourth quarter, which contributed approximately $60 million, along with a negative foreign currency impact of approximately 500 bps. These factors were partially offset by revenues generated by newly opened Best Buy Express locations in Canada in fiscal 2025.

This segment’s gross margin increased 40 bps year over year to 21.4% due to lower supply-chain costs. The segment’s adjusted operating income was $70 million, higher than the $57 million recorded last year. As a percentage of revenues, the metric increased 110 bps year over year to 5.7%.