Best Buy Earnings Skewed by Dividend and Buyback

By Jon C. Ogg Updated Jan 13, 12:43PM EST · Published Feb 25, 11:50AM EST

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Best Buy Earnings Skewed by Dividend and Buyback — © Michael Rivera / Wikimedia Commons

The Best Buy Co. Inc. (NYSE: BBY) earnings report was deemed less than great, despite being slightly ahead of earnings estimates. The electronics and home appliances retail giant posted $1.53 in adjusted earnings per share (EPS) and revenues of $13.62 billion. Thomson Reuters was calling for $1.30 EPS and $13.61 billion in revenue.

One key driver here was news that Best Buy was boosting its dividend by more than 20% to $0.28 per quarter. Best Buy also announced a special dividend of $0.45 per share and a new buyback plan of up to $1 billion.

What stands out is that the revenue figure is a 4% drop from a year earlier. Domestic sales were down by 1.5% to $12.5 billion, driven by a drop in computing and phones. To show how much Best Buy is changing: its strong sales were in wearables, major appliances and in home theater.

Another show of force is that Best Buy’s e-commerce revenue rose by almost 14% (200 basis points) to a total of 15.6% of its total domestic revenue.

Best Buy’s international sales were down about 26% to $1.1 billion, but foreign exchange pressure and store closures were cited for much of that weakness.
[nativounit]
Earnings guidance was $0.31 to $0.35 (versus $0.37 a year ago) on revenues of $8.25 billion to $8.35 billion (down 2.4% to 3.6% from a year earlier) in the coming quarter, and best Buy sees no meaningful growth in operating income nor in revenues. Best Buy expects its Enterprise and Domestic comparable sales to disappoint at -1.0% to -2.0%, and it also expects that international revenues will decline by 15% to 20%.

Best Buy’s capital return plan was stated as follows:

This plan is consistent with the company’s long-term capital allocation strategy to first fund operations and investments in growth, including potential acquisitions, and then to return excess free cash flow over time to shareholders through dividends and share repurchases, while maintaining investment grade credit metrics.

Best Buy shares were up fractionally at $31.74 late Thursday morning. The consensus analyst price target is $34.41 and the 52-week trading range is $25.31 to $42.00.

About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. a673b.bigscoots-temp.com.