Best Buy on Wednesday reported strong financial results for the holiday quarter that topped analysts' expectations. The electronics retailer said the results were driven by sales of wearables, appliances, smart home devices and gaming during the holidays. Best Buy, a barometer of consumer confidence and tech purchasing, also noted that it saw a decline in the mobile phone category over the same period.
Like other retailers navigating the bricks-to-clicks transition, Best Buy has made considerable investments to bolster the capacity in its supply chain and improve online experiences. The retailer has also doubled down on services with its Total Tech Support offering and In-Home Advisor program.
As for the numbers, the company reported fourth quarter net income of $735 million, or $2.69 a share, on revenue of $14.8 billion, down from $15.36 billion a year ago. Non-GAAP earnings were $2.72 a share. Wall Street was expecting earnings of $2.57 a share on revenue of $14.7 billion.
Best Buy said the slight revenue drop was a calendar anomaly -- Q4 2018 had one extra week in the quarter compared to this year. Best Buy estimates the extra week last year was worth approximately $760 million in revenue and approximately 20 cents of non-GAAP EPS.
Elsewhere on the balance sheet, Best Buy said comparable sales were up 3 percent, above analyst expectations. The growth marks Best Buy's eighth consecutive quarter of same-store sales gains. Same-store sales were up 4.8 percent in fiscal 2019, which Best Buy said is its fifth consecutive year of full-year comp sales growth.
Best Buy said domestic online revenue increased 9.3 percent to of $2.96 billion fueled by higher conversion rates and increased traffic. Online revenue now accounts for 21.9 percent of total domestic revenue.
"In addition to these great financial results, we made significant progress implementing our Best Buy 2020 strategy to
enrich lives through technology and further develop our competitive differentiation," said Best Buy CEO Hubert Joly.
Joly said on an earnings conference call:
During fiscal 2019, we continued to elevate the customer experience around product fulfillments enabled by the advancement of our supply chain transformation. For small products through a combination of initiatives, including expanded partnerships and automation, we continued to improve our speed of delivery to customers and expanded next day and same-day delivery options. We now offer same-day delivery on thousands of items in 40 metro areas and next day in the 60 metro areas. And customers also have the option to pick up their products in our stores within 1 hour of placing their order.
Looking forward, Joly said he saw good opportunities in the following:
- Smart home;
- Digital health.
As we look at our fiscal 2020 guidance specifically, we're expecting comparable sales growth of 0.5% to 2.5%. This growth expectation is, of course, on top of the best 2-year stack in 14 years and reflects factors such as the anticipation -- anticipated cyclical slowdown of the console gaming category and the continuing maturation of the mobile phone category. we are, again, planning to hold our operating rates -- operating income rates constant, reflecting our focus on balancing investments in our strategy, pressures in the business and efficiencies.
Looking to fiscal 2020, Best Buy expects earnings per share between $5.45 and $5.65 with annual revenue falling in the range of $42.9 billion and $43.9 billion. Analysts were expecting earnings of $5.49 a share on sales of $43.39 billion.