In a sharp turnaround from the third quarter, big-box retailer Best Buy posted higher sales for the fourth quarter of 2024, as new store formats boost store traffic in the most crucial shopping season for retailers.
The surprise rise in fourth-quarter sales ends twelve months of sales declines. Still, it confirms the cyclical nature of its business as macroeconomic conditions and competition put pressure on it.
A decade ago, for instance, the company was fighting for survival. Price competition from Amazon and high operational costs severely impacted Best Buy, resulting in substantial losses. Business experts and Wall Street analysts predicted the eventual decline of the iconic retailer.
However, the company survived and thrived again, thanks to a shrewd strategy that included the capitalization of the merging of online and offline sales, the expansion of the scope of store operations, the development of “stores within stores,” and the effective deployed Geek Squad.
“We are proud of our execution and the momentum we built in fiscal year 2025,” said Corie Barry, Best Buy CEO. “We are excited to build on that momentum to bring our FY26 strategy to life while we continue to navigate uncertain circumstances.”
Barry attributed the company’s turnaround to strengthening its retail position as the leading omnichannel destination for technology, expanding operating income, and building and scaling incremental profit streams, such as Best Buy Marketplace and Best Buy Ads.
He believes these strategic initiatives, which involve building and scaling profit streams, will drive “robust returns in the future.”
“Best Buy’s foot traffic fell 7 percent year over year during 2024, but seems to be mounting a comeback in early 2025, and the report shows that in January, year-over-year visits were up 0.4 percent,” said Ezra Carmel, a retail sector analyst for Placer.ai.
“Further, Best Buy sees visit spikes on and around holidays. For instance, visits were up 473.1 percent on Black Friday compared to the daily average for 2024.”
Carmel attributes this turnaround to Best Buy’s most efficient leverage of its store fleet by closing traditional mega-stores while opening smaller-format ones to provide better experiences for customers in small and midsized markets previously untapped by the retailer.
Matt Bilunas, Best Buy’s CFO, expects consumers to remain resilient, but cautious in fiscal year 2026 as high inflation squeezes family budgets, leaving fewer funds for discretionary high-ticket items.
“At the same time, we continue to see a consumer willing to spend on high price point products when they need to or when there is technology innovation,” he said. “This leads to our comparable sales guide in the range of flat to 2 percent growth for the year, with growth weighted more to the second half of the year based on the timing of product launches and initiatives.”
Bilunas added, “For first quarter FY26, we expect comparable sales to be slightly down to last year and our adjusted operating income rate to be approximately 3.4 percent.”
Wall Street was initially impressed by the company’s sales turnaround, but it quickly changed its mind, focusing on its rather conservative outlook for the rest of the year. Although its shares were down close to 4 percent in pre-market trading, they were still up 11 percent for the year, lagging the broader market.
Carmel is optimistic about the Big Box retailer, thinking the best is yet to come for Best Buy.
“Best Buy’s ability to drive traffic through strategic store formats, holiday shopping surges, and family households highlights the company’s ongoing relevance in the evolving consumer electronics landscape,” Carmel added. “With early signs of a foot traffic resurgence, Best Buy appears to have positioned itself for continued success in 2025.”
