After declining for three consecutive fiscal years, Best Buy’s (BBY) revenue grew in fiscal 2018, which ended on February 3, 2018. Best Buy’s revenue grew 7.0% to $42.2 billion in fiscal 2018. The company’s same-store sales increased by an impressive 5.6% in fiscal 2018. The company’s revenue growth rate in fiscal 2018 marked a notable turnaround compared to a decline of 0.3% and 2.0% in fiscal 2017 and fiscal 2016 revenue, respectively.
What drove the improved numbers
The rise in the company’s fiscal 2018 revenue was driven by improved consumer confidence, better product availability, and strength in gaming category sales. The company’s revenue in the year also benefitted from exits and declining sales of certain competitors in the consumer electronics space. Best Buy has been able to survive an extremely difficult business environment over the past few years unlike RadioShack, which filed for bankruptcy.
The 53rd week in fiscal 2018 contributed about $760 million to the overall revenue. The revenue of the company’s domestic segment grew 6.7% to $38.7 billion in fiscal 2018. The revenue of Best Buy’s international segment increased 10.6% to $3.5 billion.
Best Buy’s online business is also gaining strength. The company’s domestic online revenue accounted for 15.5% of the fiscal 2018 domestic segment revenue compared to 13.4% in fiscal 2017. Online revenue grew by 21.8% on a comparable basis to $6.0 billion in fiscal 2018.
Best Buy’s fiscal 2018 revenue was mainly driven by its strong performance in the fourth quarter, which includes the crucial holiday season. Best Buy’s fiscal 4Q18 revenue grew 14% to $15.4 billion. The company experienced strong sales in the mobile phones, gaming, appliances, smart homes, wearables, and home theatre categories in its domestic market.
Sales of rival GameStop (GME) increased 15.0% to $3.5 billion in the comparable fourth quarter. GameStop’s sales growth was primarily the result of strong demand for Nintendo Switch.
Best Buy issued a cautious outlook for fiscal 2019. The company expects its overall revenue to fall in the range of $41 billion to $42 billion in fiscal 2019. The company expects flat to 2% same-store sales growth. Analysts expect Best Buy’s revenue to decline by about 0.9% to $41.8 billion in fiscal 2019. Note that the previous year (fiscal 2018) had an additional week.