Best Buy (BBY.US) Q4 performance better than expected, sales decline trend slowing down and turning point approaching

Before the US stock market opened on February 29th (Thursday), Best Buy (BBY.US) announced its financial performance for the fourth quarter and full year of fiscal year 2024. The financial report shows that Best Buy's Q4 revenue decreased by 0.6% year-on-year to $14.65 billion, slightly better than the market's expected $14.55 billion; net profit was $460 million, compared to $495 million in the same period last year, a 7% decrease; adjusted earnings per share were $2.72, better than the market's expected $2.61, and compared to $2.61 in the same period last year. Q4 gross profit was $3.01 billion, compared to $2.94 billion in the same period last year; gross margin was 20.5%, compared to 20.0% in the same period last year. Operating profit was $561 million, compared to $597 million in the same period last year; operating profit margin was 3.8%, compared to 4.1% in the same period last year. Comparable sales decreased by 4.8%. In terms of business segmentation, domestic revenue was $13.41 billion, a 0.9% decrease year-on-year, mainly due to a 5.1% decrease in comparable sales; the decline in comparable sales of home theaters, appliances, mobile phones, and tablets was the main driver, offsetting the growth in game comparable sales. International revenue was $1.236 billion, a 2.7% increase year-on-year, mainly attributable to a 1.4% decrease in comparable sales and the negative impact of foreign exchange rates. For the full fiscal year 2023, Best Buy's revenue was $43.452 billion, a 6.15% decrease year-on-year; net profit was $1.241 billion, compared to $1.419 billion in the same period last year, a 12.54% decrease; adjusted earnings per share were $6.37, compared to $7.08 in the same period last year. It is understood that this retailer has been striving to cope with the decline in sales in recent years, especially after consumers increased their purchases of electronic products and home appliances during the pandemic period. Subsequently, consumers paused these purchases and returned to their pre-pandemic behavior. Due to inflation and rising interest rates, consumers have also cut discretionary spending and become more selective in their purchases. Electronic products and other high-priced goods are particularly vulnerable to weakened demand. The company's earnings report repeatedly emphasizes that while consumers are resilient, they are increasingly making trade-offs. Walmart (WMT.US), the world's largest retailer, reported sales and profits exceeding expectations in the fourth quarter as consumers insisted on purchasing necessities. Home Depot (HD.US) and Lowe's (LOW.US) reported declining sales as high mortgage rates suppressed demand for home improvements. Major retailers Target (TGT.US), Costco (COST.US), and Kroger (KR.US) will report earnings next week. In addition, Best Buy has been renovating its stores and reducing inventory in stores as online shopping becomes more popular. The company is also using more space for rapidly growing categories, such as PC gaming, and is working to expand its premium membership program, offering benefits such as technical support and faster delivery to customers. Looking ahead, Best Buy expects full-year revenue for fiscal year 2025 to be between $41.3 billion and $42.6 billion; comparable sales are expected to be between -3.0% and 0.0%; and adjusted earnings per share are expected to be between $5.75 and $6.20.