Consumer electronics retailer Best Buy on Thursday edged above Wall Street's earnings target for the holiday sales quarter but missed views on sales. It also guided below estimates for the current year. Still, BBY stock surged, helped by a dividend hike and buyback plans.
The Richfield, Minn.-based company earned an adjusted $2.73 a share on sales of $16.37 billion in its fiscal fourth quarter ended Jan. 29. Analysts had expected earnings of $2.72 a share on sales of $16.6 billion, according to FactSet. In the year-earlier period, Best Buy earned $3.48 a share on sales of $16.94 billion.
"(Fourth-quarter) sales of $16.4 billion were impacted by more constrained inventory than expected, including some high-demand holiday items, and the temporary reduction in store hours in January due to Omicron-induced staffing challenges," Chief Executive Corie Barry said in a news release.
Best Buy's same-store sales slipped 2.3% in the fourth quarter, vs. expectations for a decline of 0.9%.
From a merchandising perspective, the largest sales drivers in the holiday quarter were appliances, virtual reality, home theater and headphones. Those gains were more than offset by declines in gaming, mobile phones, tablets, and services.
BBY Stock Rises After Report
On the stock market today, BBY stock jumped 9.2% to close at 110.14.
For the year ahead, Best Buy forecast adjusted earnings of $9 a share on sales of $50.05 billion. That's based on the midpoint of its forecast. Wall Street analysts had predicted Best Buy earnings of $9.29 a share on sales of $50.88 billion in fiscal 2023, FactSet said. In the just-ended fiscal 2022, Best Buy earned an adjusted $10.01 a share on sales of $51.76 billion.
Best Buy increased its quarterly cash dividend 26% to 88 cents a share. It also announced plans to spend about $1.5 billion on share repurchases this fiscal year.
Best Buy set a sales goal of $53.5 billion to $56.5 billion for its fiscal 2025. It forecast an adjusted operating income rate of 6.3% to 6.8%, vs. 6% in fiscal 2022.
BBY stock has an IBD Composite Rating of 61 out of 99, according to IBD Stock Checkup. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
