Best Buy Q2 Profit Climbs, Tops Estimates

(RTTNews) - Consumer electronics retailer Best Buy Co., Inc. (BBY) posted Tuesday a surge in second-quarter profit benefited by a legal settlement gain. Adjusted earnings were significantly above Wall Street estimates on lower costs and margin strength, despite lower comparable store sales.

Going ahead to the back half of the year, the company said it is encouraged by the momentum that is being driven through the execution of Renew Blue priorities.

In pre-market activity, Best Buy shares gained $3.33 or 10.84 percent, and are currently trading at $34.06.

For the second quarter, net profit attributable to shareholders surged to $266 million or $0.77 a share from prior year's $12 million or $0.04 a share. The latest quarterly results included a gain from discontinued operations, compared to a loss last year.

On a continuing operations basis, net earnings were $237 million or $0.69 per share, higher than $31 million or $0.09 per share a year ago.

The results reflected its legal settlements with multiple defendants under which it will receive a total of $229 million. These settlements were the result of a lawsuit filed by the company that alleges price fixing by certain manufacturers of TFT-LCD panels from 1998 to 2006.

Adjusted earnings from continuing operations, which excluded items, totaled $0.32 in the latest quarter, compared to $0.26 per share a year ago. On average, 24 analysts polled by Thomson Reuters expected earnings per share of $0.12 for the quarter. Analysts' estimates typically exclude one-time items.

However, quarterly revenue slid to $9.30 billion, from $9.34 billion in the earlier year period, whereas 21 analysts estimated revenues of $9.13 billion for the quarter.

Comparable store sales edged down 0.6 percent, compared to a 3.3 percent decline a year ago.

Gross profit as a percentage of revenues were 26.5 percent, higher than 24.2 percent in the previous year.

Domestic segment revenue of $7.81 billion rose 0.1 percent year-over-year, while international revenue of $1.49 billion declined 2.9 percent versus last year.

In the quarter, domestic comparable store sales dropped 0.4 percent and international comparable store sales fell 1.8 percent.

Hubert Joly, president and CEO said that the expected decline in domestic comparable store sales was driven by short-term disruptions. Excluding these impacts, domestic comparable store sales were flat to slightly positive for the quarter.

The company said it has eliminated $65 million in additional Renew Blue cost reductions, primarily being driven by supply chain efficiencies and various efficiency improvements.