Best Buy Co Inc Profit Surges, Share Buybacks Resumed

Best Buy unveiled a better-than-expected surge in profits in its holiday quarter today, though its revenues dropped slightly short of estimates. The consumer electronics retailer also announced plans to buy back shares for the first time since 2012.

Best Buy Co Inc Profit Surges, Share Buybacks Resumed

Best Buy earnings beat forecasts

In its fourth quarter results, Best Buy reported earnings of $1.48 a share, excluding one-time items, on revenue of $14.21 billion. A consensus estimate from Thomson Reuters indicated that analysts expected the retailer to deliver quarterly earnings per share of $1.35 on $14.35 billion in revenue.

Best Buy experienced strong holiday sales, announcing $11.4 billion in enterprise revenue, a 2.6% increase in domestic comparable sales and a 13.4% increase in online comparable sales driven by higher conversion rates and increased traffic. Mirroring its strong results, Best Buy shares gained about 4% in premarket trading.

As reported by ValueWalk in January, the electronics retail giant warned that pricing pressures and sluggish post-holiday demand would likely cause a sales slump in the first half of 2015. However, the anticipated slowdown this year overshadowed a strong holiday season showing for the retailer, primarily aided by popular home theater systems and mobile phones. Its domestic sales, excluding newly opened or closed locations, grew 2.8% for the fourth quarter ended January 31.

For the most recent period, the retailer’s domestic online sales grew 9.7%. Its international same-store sales dropped 4%.

Best Buy resumes buyback

The electronics retail giant also announced Tuesday that it has authorized $1 billion in buybacks to be carried out over three years. The retailer also unveiled a 21% boost to its quarterly dividend and a special dividend of 51 cents a share.

The retailer has invested in its web operations amid concerns that its stores were becoming little more than a testing ground for products that are ultimately bought online. The consumer electronics retailer announced its fiscal 2016 master plan designed to navigate shifting consumer preferences as well as more effectively compete in a brutal retail market.

Best Buy said it will invest an incremental $100 million to $120 million in fiscal 2016, or 17 cents a share to 21 cents a share in earnings, to continue its ongoing reinvention efforts. Overall, the retailer plans to spend $650 million to $700 million on capital spending, up from $550 million in fiscal 2015.