Best Buy Sees Q1 Results Below Estimates; Lifts Dividend; Plans $3 Bln Buyback

(RTTNews) - Electronics retailer Best Buy Co., Inc. (BBY) Wednesday issued guidance for first-quarter adjusted earnings and revenues, below market estimates. Comparable sales are expected to be weak. For fiscal 2018, the company projects higher revenues and operating income. In its fourth quarter, the company posted higher profit, above market view, while revenues missed estimates with lower comparable sales.

In pre-market activity, Best Buy shares were losing 9.36 percent to $40.

Further, the company announced a 21 percent increase in regular quarterly dividend to $0.34 per share.

The company also announced a share repurchase plan that accelerates from $1 billion over two years to $3 billion over two years.

In order to execute the two-year $3 billion share repurchase plan, the board of directors approved a new $5 billion share repurchase authorization for the company's common stock, superseding the existing authorization dated June 2011 which had $2.2 billion in purchases remaining.

For the first quarter, the company expects adjusted earnings per share between $0.35 and $0.40. Enterprise revenue is expected in the range of $8.2 billion to $8.3 billion.

On average, analysts polled by Thomson Reuters expect earnings of $0.49 per share on revenues of $8.48 billion for the first quarter. Analysts' estimates typically exclude special items.

For the first quarter, the company projects Enterprise comparable sales decline of 1 percent to 2 percent, and domestic comparable sales decline of 1.5 percent to 2.5 percent. However, International comparable sales is expected in the range of flat to up 3 percent.

Best Buy CFO Corie Barry said, "Our Q1 FY18 guidance reflects the softness we have seen reported so far this quarter in the NPD-tracked categories and continued softness in the mobile phone category due both to last year's product recall and the assumption that new phone launches will occur later in the quarter than they did last year."

For fiscal 2018, which is a 53-week year, the company expects Enterprise revenue growth of approximately 1.5 percent and an operating income growth rate in the low single digits. On a 52-week basis, the company targets approximately flat revenue and operating income.

In the fourth quarter, net earnings increased to $607 million from $479 million a year ago. Earnings per share were $1.91, higher than $1.40 last year.

Adjusted net earnings were $621 million, compared to $524 million last year. Adjusted earnings per share were $1.95, compared to $1.53 a year ago.

Revenue for the quarter declined slightly to $13.48 billion from $13.62 billion a year earlier. Analysts expected earnings of $1.67 per share on sales of $13.62 billion for the quarter.

Enterprise comparable sales declined 0.7 percent, compared to a 1.7 percent drop last year.

Domestic revenue of $12.3 billion decreased 1.4 percent, mainly driven by a comparable sales decline of 0.9 percent.

Domestic online revenue, however, climbed 17.5 percent on a comparable basis to $2.3 billion, primarily due to increased traffic and higher conversion rates.

The company's International revenue increased 2.5 percent year-over-year to $1.14 billion, driven primarily by comparable sales growth of 0.9 percent primarily from business in Mexico.