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Best Buy Q4 Results Beat View; Hikes Dividend, Issues Upbeat FY19 Outlook

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Electronics retailer Best Buy Co., Inc. (BBY) on Thursday reported a 40 percent decline in profit for the fourth quarter from last year as higher revenues were more than offset by a negative impact related to the U.S. tax reform.

However, both revenue and adjusted earnings beat analysts' estimates and the company also forecast fiscal 2019 earnings also above their expectations.

In addition, the company's board of directors approved a 32 percent increase in the regular quarterly dividend to $0.45 per share, effective immediately, and a share repurchase plan of at least $1.5 billion for fiscal 2019. This reflects an updated two-year plan of $3.5 billion compared to the original $3.0 billion two-year plan announced at the beginning of fiscal 2018. Best Buy's shares are rising more than 4 percent in pre-market trades.

Best Buy's fourth-quarter net earnings decreased to $364 million or $1.23 per share from $607 million or $1.91 per share in the prior-year quarter.

The latest quarter's results include the negative impact from items related to the Tax Cuts and Jobs Act of 2017 of about $1.17 in earnings per share.

Adjusted earnings from continuing operations were $2.42 per share, compared to $1.93 per share a year ago. On average, analysts expected earnings of $2.04 per share. Analysts' estimates typically exclude special items.

Revenue for the quarter rose 13.9 percent to $15.36 billion from $13.48 billion a year earlier. Analysts had a consensus revenue estimate of $14.51 billion.

Enterprise comparable sales rose 9.0 percent, compared to a decrease of 0.7 percent last year.

Domestic revenue rose 13.4 percent from last year to $14.0 billion, mainly driven by comparable sales growth of 9.0 percent and about $715 million of revenue from an extra week, partly offset by the loss of revenue from the closure of 18 large-format stores.

International revenue increased 20.3 percent to $1.38 billion, driven primarily by comparable sales growth of 9.9 percent due to growth in both Canada and Mexico.

Looking ahead to the first quarter of 2019, Best Buy projects adjusted earnings of $0.68 to $0.73 per share and enterprise revenue of $8.65 billion to $8.75 billion.

For fiscal 2019, Best Buy forecast adjusted earnings of $4.80 to $5.00 per share and enterprise revenue of $41.0 billion to $42.0 billion.

The Street expects earnings of $0.76 per share for the first quarter and $4.75 per share for fiscal 2019 respectively.

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