Best Buy rings in a strong holiday, shares soar

TNS

Feb. 27, 2019

Best Buy Co. Inc. topped Wall Street forecasts for sales and profits in the fourth-quarter holiday period, sending shares up 11 percent in early trading.

The Richfield, Minn.-based company reported that comparable sales rose 3 percent, blowing past the 2 percent estimate most had expected.

Net income was $735 million, or $2.69 a share, in the quarter that ended Feb. 2, an increase from $364 million, or $1.23 a share from the same period a year ago.

When adjusting for one-time costs, the company reported that earnings per share jumped 12 percent to $2.72. Analysts had expected the company to report earnings of $2.56.

“We are very proud of the financial results we have just delivered,” Best Buy chief executive Hubert Joly said in a statement. “In addition to these great financial results, we made significant progress implementing our Best Buy 2020 strategy to enrich lives through technology and further develop our competitive differentiation.”

Total revenue fell 3.7 percent to $14.80 billion, but still beat expectations of $14.70 billion.

The company stressed that the current fiscal year is a week shorter than last year, a swing of approximately $760 million in revenue and approximately 20 cents in adjusted earnings in the fourth quarter.

Online sales continue to be a strong spot for the company, growing 9 percent in the quarter.

For the year, same-store sales grew 4.8 percent, with a jump of more than 10 percent in online sales growth.

Total revenue for the year was almost $42.9 billion, up about 1.7 percent despite the calendar shift. Earnings per share were up 20 percent to $5.20.

During the year, the company purchased GreatCall, a digital monitoring and emergency call service aimed at keeping older adults safe in their homes, and launched a subscription service called Total Tech Support, which gives consumers unlimited help in stores, online or over the phone for about $200 a year.

“Best Buy continues to generate increasing traction in its multi-channel quest, with both brick-and-mortar and online posting impressive performance” for both the fourth quarter and the full year, Moody’s analyst Charlie O’Shea said in a note ahead of the company’s conference call with analysts and investors.

O’Shea said Best Buy’s 6.6 percent operating margin reflects “meaningful year-over-year improvement.”

It was the seventh consecutive quarter the company has turned in comparable store sales increases of 3 percent more.