Sears Holdings Corp Misses Estimates, Best Buy Co Inc Beats But Shares Fall

Sears and Best Buy released their latest earnings reports before opening bell this morning. Best Buy posted adjusted earnings of $1.53 per share, which beat the consensus of $1.39, on $13.6 billion in revenue, which also met consensus. In the year-ago quarter, the electronics retailer posted non-GAAP earnings of $1.48 per share and revenue of $14.2 billion.

Sears reported losses of $1.70 per share and $7.3 billion in revenue, against Wall Street’s estimates of $1.36 per share in losses and $7.26 billion in sales. In the previous year’s fourth quarter, the retail chain posted losses of 34 cents per share and $8.1 billion in sales.

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Best Buy shares slip after weak guidance

Best Buy’s GAAP earnings fell to $1.40 per share from $1.46 a year ago. Comparable store sales fell 1.8% year over year for the fourth quarter of fiscal 2016, including a 1.8% decline in domestic sales. Domestic sales fell slightly from $12.7 billion to $12.5 billion, while international sales fell from $1.5 billion to $1.1 billion.

Best Buy management said they expect revenues to keep declining in the first half of fiscal 2017 with growth appearing in the second half of the year. They expect domestic revenue to remain flat year over year with growth continuing in home theater, connected home and appliances. They project a 15% to 20% decline in international sales for the year due to currency headwinds and the consolidation of the Canadian brand. They expect enterprise revenue to be between $8.25 billion and $8.35 billion and comparable store sales to fall by 1% to 2%. They project adjusted earnings of 31 cents to 35 cents for the full year.

The retailer expects to return up to $1 billion to shareholders through share repurchases over the next two years and will pay a 45-cent per-share special dividend. Best Buy also upped its quarterly dividend from 23 cents per share to 28 cents per share.

Best Buy shares slumped 3.11% to $30.50 in premarket trading.

Sears posts continuing losses

Sears’ net losses plunged to $5.44 per share for the fourth quarter, including an impairment charge related to the Sears trade name. In the year-ago quarter, the retail chain posted net losses of $1.50 per share. Domestic comparable store sales for Kmart declined 7.2% in the quarter, while domestic comparable sales at Sears fell 6.9%. However, this was an improvement from the declines in the first three quarters of the year.

Domestic adjusted EBITDA was -$82 million, excluding rent from Seritage Growth Properties and the joint venture. The year-ago quarter, the metric came to $125 million. Sears also trimmed $1 billion off its net debt position year over year.

Sears shares climbed 4.3% to $17.70 in premarket trading.