Best Buy jumps on Q4 report, Birkenstock slides on net loss

Shares of Best Buy (BBY) are trading higher as the company posted its fourth quarter report, beating expectations with $2.72 adjusted earnings per share versus an expected $2.52. However, the company issued softer-than-expected full-year guidance for fiscal year 2024.

Shares of Birkenstock (BIRK) are sliding despite posting a 26% jump in revenue year over year amid higher pricing. The company did, however, report a net loss of €7.15 million ($7.75 million) for the quarter.

Yahoo Finance Anchors Brad Smith and Seana Smith break down the latest developments for both companies.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video Transcript

- We've got some retail earnings this morning giving us another look into the state of the consumer. Let's start with Best Buy giving weaker guidance than anticipated, despite beating earnings expectations for the fourth quarter here. One thing that kind of jumped out at me was that they're banking on a year of sales stabilization for the industry.

They also laid out some of the bad news first here from merchandising perspective. The largest drivers of the comparable sales declines on a weighted basis-- home theater, appliances, mobile phones, and tablets. I know what you're thinking out there-- what's left in the store?

Well, gaming. That was the only, really, element that kind of offset some of those declines that they had seen, especially in the North American market.

- Yeah, they are making some progress here. We're going to be taking a look at the shares reaction and why we're seeing a bit of a bump. Yes, Best Buy has a number of challenges, like you just laid out there, Brad. But certainly, this might be a step, at least in the view of investors, shareholders, in the right direction here just in terms of that two-year slump, the soft demand that we have seen.

Maybe now we are starting to see a bit of a turnaround, but we got to put this in perspective, right? Because sales-- comp sales did still decline 4.8% in the fourth quarter, although that was a less-than-expected decline than what the Street had been bracing themselves for-- just over 5% adjusted earnings of $2.72, which beat the Street's expectations.

And now, I'm also going to come to that full-year guidance. We know the company projected comp sales is going to range from a decline of 3% to flat here in the current year of fiscal 2024. They previously lowered their 2024 sales guidance back in November. So all in, this report at least better than what the Street had been bracing themselves for, and that's why we're seeing shares move just a bit higher today.

Let's also get to another retail name that we are closely watching, and that is Birkenstock showing revenue growing 26% from a year ago as demand in the US strengthens. And this is just another name here showing that consumers are still out there spending, Brad. They're spending it on footwear that can cost a couple of hundred bucks, so this isn't exactly the lower end or midpoint of this range. These are people who are willing to pay up for some of this footwear, which is controversial whether or not you're actually should be paying that much for a pair of sandals.

But what I will point out and say is that this is a company that a lot of people are questioning what the growth metrics look like going forward, what exactly the scale and opportunities to scale look like in the future? But laid out in this earnings print and on this earnings call was a number of initiatives. And you can see Europe a standout within this report-- up 33% on a year-over-year basis.

- Yeah, I caught a lot of flak within our newsroom for saying that you could get the same thing at a Walmart or a Target. And I hear you out there. It's not exactly the same. But at least for me, mine still work.

Birkenstock though, I think one thing that jumps out though the clog trade flexing its legs here over the year to date scale if you really think about how Birkenstock has been able to add on and see where their merchandise can expand further, where they can continue to tap into-- OK, and now, on a year-to-date scale, they actually are down on this move here. So interesting.

But over the past 52 weeks, it's been an interesting move to the upside that I've been continuing to keep an eye on. One of the things that I think investors might be looking at here that the company laid out impacting some of that mid-term profitability is how this company is going to spend further into its operation.

They talked about achieving the above industry average full price realization. But I think at the end of the day, there's a lot of focusing in on the strategic investments into future growth having a planned temporary impact on profitability here.