Best Buy Co. Inc.’s United States online sales fell 12.0% in fiscal 2022 ended Jan. 29, 2022, compared with fiscal 2021. In Q4, U.S. online sales dropped 11.2% year over year.
Both periods compared to those in which the COVID-19 crisis sent consumers online in record numbers. During part of the retailer’s FY 2021, Best Buy’s stores were temporarily closed to shoppers and served as curbside pickup points for orders placed online.
Even though its online sales didn’t measure up to last year, FY 2022 was a record year for its total revenue and earnings, Best Buy CEO Corie Barry said in a March 3 conference call to investors and analysts.
Total revenue (online and offline) for FY 2022 was $51.76 billion, up 9.5% from $47.26 billion in fiscal 2021. Net earnings for the year were $2.45 billion, up 36.1% from $1.80 billion for the previous year.
In Q4, its total (online and offline) revenue of $16.37 billion was down 3.4% from $16.94 billion for the comparable period a year earlier. Net earnings in Q4 were $626.0 million, down 23.3% from the year-ago period. Best Buy is No. 5 in the 2021 Digital Commerce 360 Top 1000.
Best Buy reported that worse-than-expected supply constraints negatively affected Q4 sales. So, too, did a temporary reduction in store hours in January due to Omicron-induced staffing challenges. But Best Buy executives are upbeat about the future.
During the conference call, Damien Harmon, executive vice president for omnichannel, said online sales are now 34% of Best Buy’s total domestic revenue. But that’s not the only reason Best Buy’s online channel is essential.
“Today, 84% of the Best Buy customers use digital channels throughout their shopping journey,” Harmon said. “These virtual opportunities have created new ways for us to offer customers the immediate ability to shop with an expert wherever they are.”
Virtual interactions across video, chat, and voice increased 150% over the past two years, Harmon said. In addition, he said, the number of customers using the Best Buy app while in its stores grew 72% over the same period.
Harmon said when shoppers engage with a consultant or designer, they shop with Best Buy twice as frequently as those who don’t. Best Buy believes its annual consultations will grow by more than 200% by fiscal 2025, he added.
Barry said during the call that three concepts shaped Best Buy’s strategic priorities and investments during FY 2022.
“One, customer shopping behavior will be permanently changed in a way that is even more digital and puts customers entirely in control to shop how they want,” she said.
Secondly, she said Best Buy believes its workforce “will evolve in a way that meets the needs of customers while still providing more flexible opportunities for our employees.” The third concept, she said, is that technology is playing an even more crucial role in people’s lives than it did before the pandemic.
Best Buy FY 2023 guidance
On a year-over-year basis, Best Buy says it expects short-term declines in demand as it moves into quarters it will measure against high growth periods and the timeline of coronavirus-related government stimulus spending. For the rest of the current fiscal year, FY 2023, Best Buy expects revenue of $49.3 billion to $50.8 billion and a decline in comparable sales of 1.0% to 4.0%.
By FY 2025, Best Buy expects revenue of $53.5 billion to $56.5 billion and operating profit will be 6.3% to 6.8% of sales in fiscal 2025. Best Buy also says its capital spending will range between $1 billion and $1.2 billion in the next three years, compared with less than $750 million during the last three, the retailer reported.
In a note to investors, Scot Ciccarelli, an analyst with financial services firm Truist Securities, sounded a cautious note.
“We remain hold-rated, but the stock seems fairly washed out at current levels, likely reducing incremental downside potential,” Ciccarelli said in the note.
Analysts generally give companies a “hold” rating when they expect their stocks to perform at the same pace as comparable companies.
For the fourth quarter ended Jan. 29, 2022, Best Buy reported:
- Total (online and offline) revenue of $16.37 billion, down 3.4% from $16.94 billion for the comparable period a year earlier.
- Total domestic revenue was $14.99 billion, down less than 1% from $15.40 billion a year earlier.
- Online sales were down 11.2% compared with a year earlier. This also compares with a year-over-year rise of 89.3% in Q4 FY 2021.
- Online sales totaled almost 40% of total revenue.
- Net earnings of $626.0 million, down 23.3% from $816.0 million in the year-ago quarter.
- Comparable sales decreased 2.3%, compared to 12.6% growth in Q4 FY 2021.
- International revenue of $1.37 billion, a 10.7% decrease versus $1.54 billion a year earlier.
For the fiscal year ended Jan. 29, 2022, Best Buy reported:
- Total revenue (online and offline) for FY 2022 was $51.76 billion, up 9.5% from $47.26 billion in FY 2021.
- Total domestic revenue was $47.83 billion, up 10.5% compared with $43.29 billion in FY 2021.
- Online sales fell 12.0%, compared with a year-over-year rise of 144.4% for the previous fiscal year.
- Online revenue was 34% of total domestic revenue.
- Net earnings for the year were $2.45 billion, up 36.1% from $1.80 billion for the previous year.
- Comparable sales grew 10.4% compared with a rise of 9.3% for FY 2021.
- International revenue of $3.93 billion, up 6.2% from $3.70 in fiscal 2021.
Percentage changes may not align exactly with dollar figures due to rounding.
Blomberg News contributed to this report.