Best Buy shares surge on upbeat profit view, robust holiday quarter
(Reuters) – Best Buy Co Inc gave an upbeat profit forecast for the year while reporting better-than-expected holiday-quarter sales on Wednesday, as it benefited from higher demand for wearable devices, gaming consoles and appliances.
Shares of the largest U.S. consumer electronics retailer surged 11 percent, also getting a boost from an 11 percent hike in its quarterly dividend and a plan to buy back $3 billion of stock.
The retailer’s quarterly results contrasted generally weak holiday season sales from other major U.S. retailers including Macy’s, Kohl’s and Target.
To tackle competition from Amazon.com Inc, Best Buy has been beefing up its website and app, while spending on services such as “Geek Squad”, which provides general tech support and advice on setting up smart homes.
The move helped drive a 9.3 percent rise in domestic online revenue to $2.96 billion in the fourth quarter on a comparable basis.
“Best Buy continues to generate increasing traction in its multi-channel quest, with both brick-and-mortar and online posting impressive performance for both Q4 and FYE 2018,” Moody’s analyst Charlie O’Shea said.
Best Buy’s domestic comparable sales rose 3 percent in the three months ended Feb. 2, with growth across wearables, appliances, smart home and gaming, being partially offset by a decline in sales of mobile phones.
Analysts on average had expected domestic comparable sales to rise 2.03 percent, according to IBES data from Refinitiv.
Best Buy also forecast fiscal 2020 adjusted profit of $5.45 to $5.65 per share, the mid-point of which was above analysts’ expectations of $5.49.
Excluding one-time items, the company earned $2.72 per share. Analysts on average were expecting earnings of $2.57.
Total revenue fell 3.7 percent to $14.80 billion, as the year-ago quarter had an extra week, but still came above expectations of $14.70 billion.
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