(Reuters) – Best Buy Co Inc said on Thursday it expects annual sales to surpass peak pandemic levels in 2024, offsetting a disappointing holiday quarter when the top U.S. electronics retailer was shackled by product shortages.
Shares of Best Buy, a big beneficiary from pandemic-era remote-working, rose 5% in premarket trading, even as it forecast a bigger-than-expected fall in current-year revenue.
Demand for laptops, webcams and other computer accessories for home offices surged during the pandemic but is expected to wane this year with the reopening of offices.
However, Best Buy said it was confident its new $200-a year membership program, as well as other tech support and healthcare services, would boost revenue in the long term.
“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,” finance chief Matt Bilunas said.
SHORT-TERM CHALLENGES
The company forecast revenue of $53.5 billion to $56.5 billion for its year ending January 2025, largely above estimates of $53.51 billion. It reported fiscal 2021 revenue of $51.76 billion.
Evercore ISI analysts said the fiscal 2025 sales outlook is “much stronger than expected”, while operating margin outlook of 6.6% was also a positive surprise, levels last seen in 1986.
In the short term, however, Best Buy is wrestling with shortages of appliances, mobile phones and gaming consoles caused by a semiconductor chip crunch and supply-chain bottlenecks.
A staffing crunch from the spread of the Omicron coronavirus variant also hit sales, the company said.
Comparable sales fell 2.3% in the fourth quarter ended Jan. 29, bigger than analysts’ estimate for a 0.2% dip.
Best Buy expects fiscal 2023 revenue of $49.3 billion to $50.8 billion, while analysts expected $51.05 billion, according to Refinitiv data.
(Reporting by Uday Sampath in Bengaluru; Editing by Sriraj Kalluvila)
