Best Buy Hits More Than Impressive Earnings & Guidance (BBY)

Best Buy Co.Inc. (NYSE: BBY) probably deserves one of the biggest pats on the back of any company right now.  Despite all the slowing in tech and all of the buildups seen in inventories, the company managed to beat earnings and it also has guidance which is higher rather than lower than estimates.   After what we saw in August, the results are pretty amazing.

Net income rose 60% in the last quarter as shoppers snapped up its wares, with net income rising to $254 million or $0.60 EPS. The results compare with a year ago’s net income if $158 million or $0.37 EPS.  Revenues also rose 3% in total to $11.34 billion.

Best Buy gave new full year guidance of approximately $3.55 to $3.70 per share, about $0.10 higher than prior guidance and Thomson Reuters had estimates of $3.36 EPS.  This is a huge surprise considering the news and noise that had been coming out of technology companies and retailers elsewhere and it means that Best Buy got through that hard July fairly unscathed.  The company even said gross profits as a percentage of revenues grew to 25.7% from 24.4% a year ago.

There was a negative development that may get overlooked after the strong figures.  The company believes that its domestic market share declined 50 basis points from a year ago over the impact of lost traffic associated with constrained inventory during the initial iPad launch which adversely impacted traditional mobile computing traffic, the continued decline in entertainment software and moderating market share gains in home theater due to last year’s digital conversion. Best Buy still expects to increase its market share for the full fiscal year.  There was also a 1% drop in same store sales in the quarter which was offset by new stores and other items.

Shares are now indicated up 9% at $37.86 after a $34.65 close on Monday.  The 52-week trading range was $30.90 to $48.83.

JON C.OGG