Best Buy beat fourth quarter earnings as the chain braces for tariff impact

Best Buy (BBY) is turning around a three-year decline in sales growth.

On Tuesday before market open, the electronics retailer reported fourth quarter results that beat Wall Streets' expectations. Same-store sales jumped 0.50%, compared to the 1.45% decrease anticipated. This comes after 12 consecutive quarters of negative same-store sales growth.

“I am pleased to report better-than-expected sales for the fourth quarter driven by strong growth in computing as well as improved sales performance in other categories,” Best Buy CEO Corie Barry said in the release.

This coming fiscal year, the company expects revenue of $41.4 billion to $42.2 billion. Wall Street expected guidance of $41.69 billion. Same-store sales are expected to be flat to up 2.0%, compared to estimates of a 1.44% increase.

Adjusted earnings per share is projected to be $6.20 to $6.60; Wall Street had estimated $6.55. Guidance does not include the impact of tariffs.

The replacement cycle is kicking in around laptops, notebooks, and phones, especially as innovation around AI ramps up. Evercore analyst Greg Melich called the year a "sweet spot" for the four-to-five-year replacement cycle since the pandemic spending spree started in 2020.

"We continue to see a consumer that is willing to spend on high price point products when they need to or when there is technology innovation," CFO Matt Bilunas said in the release.

In pre-market, shares are slightly down as investors digest the better-than-expected numbers, but also consider the uncertainty of tariffs and ongoing inflation. As of market close Monday, Best Buy's stock was up nearly 5% year to date, ahead of the S&P 500's (^GSPC) 1.2% gain.

Here's what Best Buy posted in the fourth quarter, compared to Bloomberg estimates:

Adjusted earnings per share: $2.58, versus $2.40

Net sales: $13.95 billion, versus $13.69 billion

Same-store sales growth overall: 0.50%, versus -1.45%

Total US same-store sales growth: 0.20%, versus -1.34%

Sales growth for:

• Appliances: -11.40%, versus -8.9%

• Entertainment: -10.90%, versus -7.47%

• Consumer electronics: -2.20%, versus -4.38%

• Computing and mobile phones: 6.50%, versus 4.13%

• Services: 9.90%, versus 4.38%

International: 3.80% versus -1.95%

The company also shared full-year results.

For the fiscal year, same-store sales fell 2.3%, less than the previous projected range of a 2.5% to 3.5% decline. The Street expected a 2.93% decline.

Revenue was $41.53 billion, above the guidance range of $41.1 billion to $41.5 billion. Adjusted earnings per share came in at $6.37, compared to the guidance range of $6.10 to $6.25.