What To Expect From Best Buy’s Q4

Best Buy (NYSE:BBY) is scheduled to announce its fiscal fourth quarter results on Thursday, March 1. The company announced better-than-expected 2017 results so far, as both its revenue and earnings per share came in ahead of market expectations in the first two quarters, and its earnings per share came in line but revenue missed market expectations in the third quarter. We have created an Interactive Dashboard which outlines our forecasts for the company’s Q4 and expectations for its fiscal 2018 results. You can modify our forecasts to see the impact any changes would have on the company’s earnings and valuation.

Domestic Business Continues To Grow 

In the first nine months of 2017, Best Buy’s revenue grew 3% year-over-year (y-o-y) to around $27 billion, primarily due to an enterprise comparable sales increase of nearly 4%. The company benefited from stronger consumer demand across most categories, particularly computing, wearables, gaming, and tablets. The retailer’s domestic segment revenue increased 3% y-o-y to $25 billion, as domestic comparable sales grew 3.8%, partially offset by the loss of revenue from Best Buy and Best Buy Mobile stores closed during 2017. In the international segment, the company’s revenue increased 5% y-o-y to $2.1 billion, also driven by comparable sales growth of 3.8%, driven by growth in both Canada and Mexico. We expect a similar trend to continue in the fourth quarter as well.

Boost in Holiday Sales

For the fourth quarter, Best Buy expects its sales to benefit from the positive category momentum from the first nine months of the year. As a result, the company expects its total revenue to be in the range of $14.2-$14.5 billion in the fourth quarter. It also expects domestic comparable sales growth in the range of 1% to 3%, and adjusted earnings per diluted share of $1.89 to $1.99 for the company. To add to that, U.S. retailers recorded a 6% y-o-y gain in November and 1% y-o-y in December in electronics and appliances stores. Based on this number, we expect Best Buy to witness a boost in its holiday sales in Q4.

For the full year fiscal 2018, the company expects revenue growth to range between 4% to 4.8% compared to the prior outlook of approximately 4%. It also expects full year non-GAAP operating income growth of 7% to 9.5% versus its original outlook of 4% to 9% growth.

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