Electronics retailer Best Buy (NYSE: BBY) fell short of the market’s revenue expectations in Q4 CY2025, with sales flat year on year at $13.81 billion. The company’s full-year revenue guidance of $41.65 billion at the midpoint came in 1.4% below analysts’ estimates. Its non-GAAP profit of $2.61 per share was 5.8% above analysts’ consensus estimates.
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Best Buy (BBY) Q4 CY2025 Highlights:
- Revenue: $13.81 billion vs analyst estimates of $13.89 billion (flat year on year, 0.5% miss)
- Adjusted EPS: $2.61 vs analyst estimates of $2.47 (5.8% beat)
- Adjusted EBITDA: $1.06 billion vs analyst estimates of $892.8 million (7.7% margin, 19.1% beat)
- Adjusted EPS guidance for the upcoming financial year 2027 is $6.45 at the midpoint, missing analyst estimates by 3%
- Operating Margin: 5.2%, up from 1.6% in the same quarter last year
- Free Cash Flow Margin: 8%, down from 9.7% in the same quarter last year
- Same-Store Sales were flat year on year (0.5% in the same quarter last year)
- Market Capitalization: $12.91 billion
Company Overview
With humble beginnings as a stereo equipment seller, Best Buy (NYSE: BBY) now sells a broad selection of consumer electronics, appliances, and home office products.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
With $41.69 billion in revenue over the past 12 months, Best Buy is larger than most consumer retail companies and benefits from economies of scale, enabling it to gain more leverage on its fixed costs than smaller competitors. This also gives it the flexibility to offer lower prices. However, its scale is a double-edged sword because it’s harder to find incremental growth when you’ve penetrated most of the market. To accelerate sales, Best Buy likely needs to optimize its pricing or lean into international expansion.
As you can see below, Best Buy’s revenue declined by 3.4% per year over the last three years as it closed stores and observed lower sales at existing, established locations.
This quarter, Best Buy missed Wall Street’s estimates and reported a rather uninspiring 1% year-on-year revenue decline, generating $13.81 billion of revenue.
Looking ahead, sell-side analysts expect revenue to grow 1.2% over the next 12 months. While this projection implies its newer products will catalyze better top-line performance, it is still below the sector average.
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Store Performance
Number of Stores
A retailer’s store count often determines how much revenue it can generate.
Best Buy has generally closed its stores over the last two years, averaging 1.1% annual declines.
When a retailer shutters stores, it usually means that brick-and-mortar demand is less than supply, and it is responding by closing underperforming locations to improve profitability.
Note that Best Buy reports its store count intermittently, so some data points are missing in the chart below.
Same-Store Sales
The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales is an industry measure of whether revenue is growing at those existing stores and is driven by customer visits (often called traffic) and the average spending per customer (ticket).
Best Buy’s demand has been shrinking over the last two years as its same-store sales have averaged 1% annual declines. This performance isn’t ideal, and Best Buy is attempting to boost same-store sales by closing stores (fewer locations sometimes lead to higher same-store sales).
In the latest quarter, Best Buy’s year on year same-store sales were flat. This performance was a well-appreciated turnaround from its historical levels, showing the business is improving.
Key Takeaways from Best Buy’s Q4 Results
We were impressed by how significantly Best Buy blew past analysts’ EBITDA expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its full-year EPS guidance missed and its full-year revenue guidance fell slightly short of Wall Street’s estimates. Zooming out, we think this was a mixed quarter, but it seems expectations were low. The stock traded up 13.3% to $69.80 immediately following the results.
Should you buy the stock or not? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).
