Best Buy’s (BBY) first-quarter earnings got a boost from broad-based revenue growth, aided by positive comparable store sales across all geographical regions, and exceeded market expectations. Though the stock bounced initially, it lost nearly 4% in the premarket reflecting the downbeat investor sentiment over the company’s soft guidance. Last week, the stock had jumped to a record high.
Net income from continuing operations increased to $208 million or $0.72 per share from $188 million or $0.60 per share in the first quarter of 2018. On an adjusted basis, earnings from continuing operations were $0.82 per share, up 37% compared to last year. Adjusted results exceeded analysts’ estimates by 8 cents.
During the three-month period, total revenues moved up 7% to $9.1 billion and surpassed expectations. Revenues from the domestic segment grew 6.3%, while international revenues jumped 13%. Overall comparable store sales grew 7.1%, helped by a 12% gain in online sales in the domestic segment. International comparable sales were higher by 6.4%.
“The top-line strength is the result of continued healthy consumer confidence, product innovation in multiple areas of technology, and our unique value proposition resonating with customers. We are executing well and customers are responding positively to the unique experience we provide to them online, in stores and in their homes,” said Best Buy CEO Hubert Joly.
The stock dipped after the earnings release, reflecting the downbeat investor sentiment over the soft guidance
Reflecting its continued investments in the long-term, such as supply chain and launch of Total Tech Support, Best Buy currently expects comparable store sales to grow 2% in fiscal 2019. Full-year revenues are forecast in the range of $41 billion to $42 billion, and adjusted earnings between $4.5 and $5 a share.
The comparable store sales outlook for the second quarter is a 3-4% increase. For the quarter, the company is looking for revenues in the range of $9.1 billion to $9.2 billion, and adjusted earnings in the range of $0.77 per share to $0.82 per share.
During the first quarter, Best Buy returned around $528 million to shareholders by way of share repurchases and dividends.
The electronics retailer recently revealed plans to sever ties with Huawei Technologies, after government agencies launched a crackdown against China-based tech companies. It is also planning to close its 250 small-format mobile phone stores in the US.
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