Business

Best Buy sees reaching $50 billion in revenue by fiscal 2025, targets $1 billion in cost cuts

Best Buy is targeting $50 billion in revenue by fiscal 2025, the company announced Wednesday morning ahead of a meeting with investors in New York.

The company also said in a press release it plans to cut an additional $1 billion in costs over the next five years, while operating income over that time frame grows at a 5% rate.

For fiscal 2020, Best Buy is still targeting revenue to fall within a range of $43.1 billion to $43.6 billion.

The electronics retailer previously had been calling for fiscal 2020 earnings per share to fall between $5.60 and $5.75, excluding one-time items. Sales at stores open at least a year have been forecast to rise 0.7% to 1.7%.

Moody’s retail analyst Charlie O’Shea called Best Buy’s new financial targets “very attainable” and said they align with the firm’s “long-standing view that Best Buy will continue as one of the top performers in U.S. retail.”

“The core franchise remains on rock-solid footing, driven by … vendor relationships that are expanding and deepening, a store experience that clearly resonates with consumers, and a sensible extension strategy into segments such as health care,” O’Shea said in an emailed statement. “In addition, Best Buy’s conservative financial policy affords it the flexibility to invest if necessary to execute this growth plan.”

Analysts on average project Best Buy will earn between $5.60 and $5.86 per share this fiscal year, on sales of $43.39 billion, according to Refinitiv.

For the third and current quarter, analysts have been calling earnings per share of $1.03, on sales of $9.7 billion.

CEO Corie Barry said in an interview with CNBC’s Courtney Reagan ahead of the investor meeting that Best Buy plans to “double down” on its growth strategy, despite “disruption” in the industry. Barry just took over the CEO role in June, making her the first woman to lead the Minnesota-based company, and, at 44, the youngest female CEO in the Fortune 100.

Last month, Best Buy’s second quarter profits topped analysts’ expectations, but sales came up short. The company has been investing in its supply chain to speed up delivery ahead of the holiday season, in addition to a slew of recent investments in health care, which it hopes will set it apart from other competitors in the electronics space.

Best Buy has also been focused on growing partnerships with tech behemoths, including Amazon.

Best Buy shares, as of Tuesday’s market close, have surged more than 27% this year. In premarket trading on Wednesday, the stock was up less than 1%.

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