Impressive fourth-quarter results
On February 27, Best Buy (BBY) stock rose 11.8% as of 8:47 AM EST in the pre-market trading hours. The company beat analysts’ expectations for the fourth quarter of fiscal 2019, which ended on February 2. Best Buy’s fourth-quarter revenues of $14.8 billion beat analysts’ expectation of $14.7 billion. However, the company’s fourth-quarter revenues fell 3.7% on a year-over-year basis, which reflected the impact of an extra week in the fourth quarter of fiscal 2018.
Best Buy’s overall and Domestic segment same-store sales grew 3.0% in the fourth quarter due to strength in the wearables, appliances, smart home, and gaming merchandise categories. The growth was partially offset by lower mobile phone sales. Best Buy’s domestic online sales grew 9.3% on a comparable basis during the holiday quarter. The same-store sales in the company’s International segment grew 2.5%.
Best Buy’s adjusted EPS rose 12.4% to $2.72 in the fourth quarter and beat analysts’ expectation of $2.57. Best Buy’s EPS growth was driven by lower taxes and the impact of a lower share count due to share repurchases.
Overall, Best Buy’s adjusted EPS grew 20.4% to $5.32. The company’s revenues rose 1.7% to $42.9 billion in fiscal 2019. Best Buy’s same-store sales rose 4.8% in fiscal 2019.
Guidance for fiscal 2020
Best Buy expects its fiscal 2020 revenues to be $42.9 billion–$43.9 billion. The company expects its same-store sales growth to be 0.5%–2.5%. Best Buy expects its fiscal 2020 adjusted EPS to be $5.45–$5.65. Analysts expected the adjusted EPS to be $5.49 on revenues of $43.4 billion.
Best Buy’s focus on its services business and growth categories, like smart home, is helping it grow despite intense competition from online retailers like Amazon (AMZN).
Best Buy announced an 11% hike in its quarterly dividend per share to $0.50. Best Buy’s board of directors has approved a new $3.0 billion share repurchase program. The company intends to make share repurchases of $750 million–$1.0 billion in fiscal 2020. In fiscal 2019, Best Buy rewarded shareholders with dividends of $497 million and share repurchases worth $1.5 billion.