Best Buy Co., Inc. said on Thursday it expects annual sales to surpass peak pandemic levels in 2024, propelled by the top U.S. electronics retailer’s investments in membership programs that have pulled in millions of subscribers.
Shares of the company, a big beneficiary from pandemic-era remote-working, jumped 12 percent, even as holiday quarter sales tumbled more than market estimates on product shortages.
Best Buy expects its $200-a-year Totaltech membership to add $1.5 billion in revenue by fiscal 2025 through fees and enticing customers to make more frequent purchases.
The program, which offers perks such as access to hard-to-find products, extended warranties and discounts, has added 4.6 million subscribers since its launch in October, and the company expects that to double by the start of 2025.
“We do not, for 1 minute, believe we hit our peak revenue,” Chief Executive Corie Barry said on an investor call.
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.
Short-Term Challenges
However, company executives said investments in the membership programs would take a toll on profits in the current year.Demand for laptops, webcams, and other computer accessories for home offices—which powered record surges in annual revenue—is also expected to drop drastically this year with the reopening of offices.
Best Buy estimated fiscal 2023 revenue of $49.3 billion to $50.8 billion and earnings per share of $8.85 to $9.15.
Analysts on average were expecting revenue of $51.05 billion and earnings of $9.16 per share, according to Refinitiv data.
