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Best Buy blows past forecasts in Q4

Best Buy reported much better than expected income and sales for its fourth quarter amid strong customer demand and increased product availability.

The chain reported its results on Thursday amid news that it planned to shut all of its 250 standalone mobile phone stores by the end of May.

Best Buy’s net income dropped to $364 million, or $1.23 per share, from $607 million, or $1.91 a share, a year ago, during the quarter that included an extra week. New tax legislation reduced earnings per share by $1.17, according to the company.

Excluding one-time items, Best Buy earned $2.42 a share, blowing past analysts’ forecasts as 38 cents higher than analysts' expectations, based on a Thomson Reuters survey.

Revenue climbed 14% to $15.36 billion besting analysts’ forecasts of $14.51 billion. Online U.S. sales surged 17.9% accounting for about 20% of Best Buy’s total revenue.

Same-store sales rose 9%, nearly triple what analysts had expected and bringing the chain’s annual comparable sales growth to 5.6% for the year.

“The comparable sales growth of 9% in the quarter is the result of the strong execution of our strategy combined with better product availability, a continued healthy consumer confidence and positive macro conditions, strength in the gaming category, and a favorable competitive environment, as we benefitted from the exit or decline of certain competitors,” stated Best Buy CFO Corie Barry.

The company said it plans to continue to invest in its long-term growth initiative, Best Buy 2020, which it announced last year. The company looking to eliminate $600 million in annual costs and hit $41 billion in annual revenue by fiscal 2021.

“Looking ahead, we remain confident in Best Buy,” said Neil Saunders, managing director, GlobalData Retail. “A good management team, some smart strategic moves, and continued demand for electronics with customer service will all help ensure its continued relevance and success.”

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