Best Buy Reports Lower 4th Quarter Sales Due to Supply Chain Issues, Omicron
Despite a dip in sales during its holiday-heavy fourth quarter, Best Buy Co. Inc. on Thursday reported record annual revenue in its latest fiscal year.
Sales fell to $16.37 billion in the last three months of Best Buy’s fiscal year that ended Jan. 29, down from $16.94 billion in the same quarter a year ago, according to the company’s latest earnings report.
Sales were impacted by a constrained inventory and a company-imposed reduction of in-store hours in January due to Omicron-induced staffing challenges, Best Buy CEO Corie Barry said in a statement.
“We are deliberately investing in our future and furthering our competitive differentiation which, as expected, impacted our Q4 profitability,” Barry said. “The biggest areas of investment were our new membership program, technology and Best Buy Health, all core to our future growth potential.”
Even with online sales at almost 40% of Best Buy’s domestic revenue, Best Buy shipped products to customer homes more than 25% faster than in its two prior years, the CEO reported.
“Our teams showed remarkable execution and dedication to serving our customers throughout the important gift-giving season,” Barry said. “In Q4, we drove improvement in year-over-year customer satisfaction metrics across almost all areas, particularly for in-store, online and chat experiences.”
While the fourth quarter showed a dip in sales from the year prior, Best Buy netted $51.76 billion for the year, remaining on track with its predicted full-year revenue range of $51 billion to $52 billion. This is up from $47.26 billion in the 2021 fiscal year.
“FY22 was another record year,” Barry said. “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. 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.”
Best Buy also announced a 26 percent increase in its quarterly dividend to $0.88 per share Thursday, along with a plan to spend approximately $1.5 billion in share repurchases in fiscal year 2023.
In the past two years, total cash provided by operating activities was $8.2 billion and Best Buy generated more than $6.5 billion in free cash flow, Best Buy CFO Matt Bilunas said in a statement. In the fiscal year 2022, the company returned $4.2 billion to shareholders in the form of share repurchases and dividends.
“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.”