Best Buy Reports Better-Than-Expected Q1, But Shares Still Fall 5%
Best Buy said that it earned $0.44 per share in the first quarter on revenue of $8.44 billion. Wall Street analysts were expecting the company to earn $0.34 per share on revenue of $8.29 billion.
Domestic revenue fell 0.8 percent from a year ago to $7.8 billion due to the loss of revenue from 13 large format stores and 24 Best Buy Mobile stores, which were closed. International revenue fell 8.1 percent to $614 million due to unfavorable exchange rates and loss of revenue due to closures associated with a brand consolidation in Canada. Online sales grew 24 percent in the quarter.
Best Buy noted that its comparable sales for the domestic segment were essentially flat versus a prior guidance of a 1 percent to 2 percent decline. The company cited strong sales growth in health and wearables, home theater and appliances, which offset continued softness in mobile phones and tablets.
Looking forward to the second quarter, the company expects its total revenue to be in a range of $8.35 billion to $8.45 billion and flat comparable sales. Non-GAAP diluted earnings per share is guided to be in a range of $0.38 to $0.42.
"Our teams delivered a strong first quarter, with better-than-expected revenue, improved profitability and progress against our fiscal 2017 initiatives," said Best Buy Chairman and CEO Hubert Joly. "We are reaffirming our previously provided full year financial outlook which includes approximately flat revenue and non-GAAP operating income, with non-GAAP EPS growth driven by share repurchases. Although we are reporting better-than-expected results today, we are not raising our full year outlook as the first quarter represents less than 15 percent of full year earnings and at this stage we have no new material information as it relates to product launches throughout the year."
Best Buy also announced that part of an internal succession plan, Sharon McCollam, the company's chief administrative and chief financial officer, will be stepping down on June 14, 2016, and remain an advisor until January 28, 2017.
Corie Barry, Best Buy's current chief strategic growth officer will assume the duties of chief financial officer as of June 14. Asheesh Saksena will join Best Buy from Cox Communications to replace Barry.
At time of writing, Best Buy was down 5.24 percent at $31.27.
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