Best Buy shares surged on Wednesday after the company reported earnings for the fourth quarter that topped analysts’ expectations, fueled by sales of wearables, appliances and smart home devices during the holidays.
The company has been making investments to keep its prices competitive, offer more services — like its in-home tech support — to shoppers, and bulk up its supply chain to be able to fulfill online orders from the back of its stores. Best Buy’s latest quarterly results show evidence those investments are paying off.
The retailer’s stock jumped more than 15 percent in early trading on the news. As of Tuesday’s market close, Best Buy shares had fallen nearly 17 percent over the past 12 months, bringing its market cap to about $6.2 billion.
“Our customers are noticing the improved experience we provide them as they interact with us digitally, in stores or in their homes,” CEO Hubert Joly said on a call with analysts.
For the fourth quarter ended Feb. 2, Best Buy said net income rose to $735 million, or $2.69 per share, from $364 million, or $1.23 a share, a year ago. Excluding one-time items, Best Buy earned $2.72 a share, topping expectations for $2.57, based on a survey by Refinitiv data.
Revenue fell to $14.80 billion during the quarter from $15.36 billion a year ago. But that was still ahead of expectations for $14.70 billion. The fourth quarter of 2018 included one less week than in 2017, Best Buy said.
Sales at Best Buy stores open for at least 12 months were up 3 percent, topping expectations for growth of 2 percent. The company has now reported eight consecutive quarters of same-store sales gains. It said same-store sales were up 4.8 percent in fiscal 2019.
Looking to fiscal 2020, Best Buy is calling for earnings per share of between $5.45 and $5.65. Analysts were expecting earnings of $5.49 a share. Best Buy says same-store sales should be up as much as 2.5 percent this year, with annual revenue falling between $42.9 billion and $43.9 billion. Analysts were expecting sales of $43.39 billion.
Best Buy’s 2020 outlook assumes tariffs stay at a current rate of 10 percent, CFO Corie Barry said. She said the tariffs that went into effect in September touched about 7 percent, or roughly $2.3 billion, of the retailer’s cost of goods sold.
Best Buy also on Wednesday said it’s raising its quarterly dividend by 11 percent, to 50 cents per share, and announced a new $3 billion share repurchase program.
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