Best Buy Co., Inc. (NYSE:BBY) reported its second quarter earnings before opening bell, posting results that were far greater than expected. The company’s profits climbed to $266 million or 77 cents per share. That’s compared to $12 million or 4 cents per share in the same quarter a year ago. Adjusted earnings per share were 32 cents. Revenue declined to $9.3 billion from $9.34 billion, although it was still better than expected.
Analysts had been expecting the retail chain to report earnings per share of 12 cents on revenue of $9.13 billion for the quarter. Shares of Best Buy Co., Inc. (NYSE:BBY) surged in premarket trading, climbing as much as 10 percent after the report was released.
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Domestic and international sales
Domestic comparable store sales fell .4 percent, although the company said the decline was “driven by short-term disruptions caused by the retail deployment of the Samsung Experience Shops, Windows Stores and floor space optimization.” Excluding those impacts, domestic comparable store sales were flat to slightly positive. The company’s domestic gross profit rate was 27.4 percent, compared to 24.3 percent in the same quarter a year ago. Excluding legal settlements, the rate was 24 percent.
International revenue was $1.49 billion, a 2.9 percent decline year over year. The company attributed the decline to the loss of revenue from 15 large format stores that were shut down in Canada last year. Also international comparable store sales fell 1.8 percent, largely impacted by lower demand for consumer electronics. International gross profit rate was 22.3 percent, compared to 23.8 percent last year.
Best Buy’s progress on recovery
The electronics store chain reported “substantial progress” on its Renew Blue priorities. It reported a more than 10 percent increase in domestic comparable online sales and improved its net promoter score. It also enriched the customer shopping experience through the rollout of the Samsung and Windows shops and piloted their buy online ship from store initiative in 50 stores. In addition, it slashed $65 million more in annualized costs. That brought the chain’s nine-month total of annualized cost reductions to $390 million. The company’s goal is $725 million.
Best Buy wins legal settlement
Best Buy Co., Inc. (NYSE:BBY) also reported that during the quarter it reached settlements with a number of defendants in a price fixing case it filed against manufacturers of TFT-LCD panels. The company will receive $229 million, net litigation costs, in connection with that settlement.