Best Buy same-store sales surge, top 4Q expectations

Best Buy is reporting surging sales at stores and it’s topped Wall Street’s profit and revenue expectations for the fourth quarter. The consumer electronics retailer also provided a 2019 outlook above analysts’ estimates.

Sales at comparable stores jumped 9 percent during the critical period that includes the holidays. That’s a big turnaround from a year earlier when the figure dipped 0.9 percent for the consumer electronics retailer.

Chief Financial Officer Corie Barry said in a statement that Best Buy was able to benefit from several factors, including the hardships of some of its competitors. Rival hhgregg Inc. announced in April that it was going out of business and closing all of its stores. And last March RadioShack announced that it had filed for Chapter 11 bankruptcy protection for the second time in just over two years

For the quarter ended Feb. 3, Best Buy posted net income of $364 million, or $1.23 per share. That compares with earnings of $607 million, or $1.91 per share, a year ago.

Earnings, adjusted for onetime gains and costs, were $2.42 per share, blowing past the pershare projections from analysts of $2.05, according to Zacks Investment Research.

Revenue for Best Buy was $15.36 billion, well above projections for $14.57 billion.

The earnings announcement came a day after Best Buy said it was shuttering all 250 of its small-format mobile phone stores in the U.S., saying the locations have become less profitable.

A memo from the CEO to employees said the stores will close by the end of May and every effort will be made to retain the workers.

Best Buy launched the stores more than a decade ago, before Apple’s iPhone was launched. The mobile phone business was then growing quickly, with high profit margins.

But it said the business has matured and running the mobile stand-alones cost more than its larger stores, and that 85 percent of the stand-alone stores are within 3 miles of a big box store.

Best Buy says the stand-alone stores account for just over 1 percent of the company’s total revenue.

Going forward, Best Buy Co. foresees 2019 adjusted earnings between $4.80 and $5 per share. It expects 2021 adjusted earnings in a range of $5.50 to $5.75 per share, mostly due to the recent tax overhaul. Analysts polled by FactSet predict 2019 earnings of $4.71 per share.

The company also said its board approved a 32 percent increase in its quarterly dividend. Best Buy will pay a 45 cent dividend April 12 to shareholders of record March 22. The board also approved the repurchase of up to $1.5 billion in stock for the year.