Best Buy Q2 Results Top Estimates

(RTTNews) - Consumer electronics retailer Best Buy Co., Inc. (BBY) reported Tuesday a profit for the second quarter that grew 12 percent from last year, reflecting improved margins and revenue growth. Both adjusted earnings per share from continuing operations and quarterly revenues topped analysts' expectations.

Following the announcement, the company's shares are soaring more than 13 percent in pre-market trading.

"We believe these better-than-expected second quarter results are affirmation that our strategy of offering advice, service and convenience at competitive prices is paying off. Enterprise revenue grew 0.8% to $8.5 billion driven by a 3.9% increase in the Domestic segment, partially offset by the impact of the Canadian brand consolidation and 120 basis points of pressure from foreign currency," President and CEO Hubert Joly said.

The Richfield, Minnesota-based retailer, which is also known as the 'big blue box' because of the prominent design on Best Buy stores, reported net earnings attributable to Best Buy shareholders of $164 million or $0.46 per share for the second quarter, higher than $146 million or $0.42 per share in the prior-year quarter.

Net earnings from continuing operations for the quarter grew to $164 million or $0.46 per share from $137 million or $0.39 per share last year.

Excluding charges, adjusted earnings from continuing operations was $174 million or $0.49 per share, compared to $148 million or $0.42 per share for the year-ago quarter.

On average, 23 analysts polled by Thomson Reuters expected the company to report earnings of $0.34 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the quarter increased to $8.53 billion from $8.46 billion in the same quarter last year, and topped twenty Wall Street analysts' consensus estimate of $8.29 billion.

Best Buy reported that its total comparable store sales increased 3.8 percent on top of 2.2 percent drop last year.

Best Buy's domestic revenues increased 3.9 percent to $7.88 billion, with comparable store sales growth of 3.8 percent. Comparable online sales increased 17 percent to $676 million, primarily due to increased traffic and higher conversion rates.

International revenues declined 25.6 percent to $650 million, primarily driven by industry declines in Canada, loss of revenue from store closures in Canada, and a negative foreign currency impact of about 1,200 basis points.

Operating margin for the quarter improved 70 basis points to 3.4 percent from last year's 2.7 percent, as gross profit margin expanded 120 basis points, partially offset by a 50 basis points increase in selling, general and administrative expenses as a percentage of total revenues.

Looking ahead to the third quarter, the company expects the continued strength in its domestic business to offset by the near-term impacts of Canada. It projects revenue growth to be in a range of flat to negative low-single digit rate.

"As we look forward, while we are cognizant of the recent financial market turbulence, we believe the combination of an opportunity-rich environment and the strength of our competitive advantages leads us to have a positive outlook about our future prospects, starting with the important back-to-school third quarter," Joly added.

BBY closed Monday's regular trading session at $29.27, up $0.47 on a volume of 8.56 million shares. In the past 52-week period, the stock has been trading in a range of $28.32 to $42.00.