Shares of consumer electronics retailer Best Buy Co. Inc. (BBY, Financial) soared more than 15% on Wednesday morning after reporting strong fourth-quarter and full-year 2019 results.
The Minneapolis-based company, which sells everything from video games, computers and cell phones to home appliances, posted adjusted earnings of $2.72 per share for the quarter, topping Refinitiv’s estimates of $2.57. While revenue declined from $15.36 billion in the prior-year quarter to $14.8 billion, it still beat expectations of $14.7 billion. The company also noted the quarter was a week shorter than last year, which contributed to the decrease in revenue.
Comparable store sales increased 3%, ahead of expectations of 2% growth, marking Best Buy’s eighth consecutive quarter of same-store sales gains.
For the full year, the company recorded adjusted earnings of $5.32 per share on $42.8 billion in revenue. Same-store sales were up 4.8%.
Best Buy attributed its strong performance to robust sales of wearables, appliances, smart home products and gaming consoles during the holiday season. In a statement, Chairman and CEO Hubert Joly said the company is also benefiting from the investments it has made in keeping its prices competitive and beefing up its services.
“In addition to these great financial results, we made significant progress implementing our Best Buy 2020 strategy to enrich lives through technology and further develop our competitive differentiation,” he said. “We launched our Total Tech Support program, expanded our In-Home Advisor program and acquired GreatCall. I so appreciate the hard work of our associates, as well as our partners, in driving these terrific results.”
Chief Financial Officer and Strategic Transformation Officer Corie Barry expanded on the initiative, saying Best Buy’s priority in fiscal 2020 is to continue its restructuring “by bringing to market solutions that solve real customer needs and by building customer relationships.”
For fiscal 2020, the retailer is guiding for earnings per share between $5.45 and $5.65. It is also projecting same-store sales growth of up to 2.5% and expects revenue to fall between $42.9 billion and $43.9 billion. According to CNBC columnist Lauren Thomas, Barry said the company’s outlook for the year assumes tariffs will remain at the current 10% rate. She added that the tariffs implemented in September impacted about 7%, or $2.3 billion, of Best Buy’s cost of goods sold in 2019.
Best Buy also disclosed its board of directors boosted the quarterly dividend 11% to 50 cents per share and announced a new $3 billion share repurchase program.
With an $18.76 billion market cap, shares of Best Buy were trading around $69.72 on Wednesday. After tumbling approximately 23% in 2018, GuruFocus estimates the stock has climbed 32% year to date.
Disclosure: No positions.
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