Best Buy falls short on revenue but beats on earnings

Best Buy Corp. came up short on top line growth in its fourth quarter amid problems with product availability. But its income topped expectations, helped by operational improvements and store closures.



The consumer electronics retailer on Wednesday issued a first-quarter forecast that missed Wall Street's expectations. It also detailed the next phase of its turnaround, which includes expanding its in-home advisory program, accelerating growth in Canada and Mexico, and more cost cutting.



For the quarter ended Jan. 28, Best Buy earned $607 million, or $1.91 a share, up from $479 million, or $1.40 a share, a year ago.



Total revenue totaled $13.48 billion, less than expected, and down from $13.62 billion year. Best Buy had previously cautioned that its domestic sales would take a $200 million hit from Samsung Galaxy Note 7 smartphone recalls and the absence of those sales during its fourth quarter.



Best Buy’s domestic same-store sales fell 0.9%.



Domestic online comparable sales increased 17.5%, due to increased traffic and higher conversion rates. As a percentage of total online revenue increased 300 basis points to 18.6% versus 15.6% last year.



“Our strong bottom-line performance in the fourth quarter was driven by a disciplined promotional strategy, continued optimization of merchandise margins and strong expense management,” said Hubert Joly, Best Buy chairman and CEO. “Domestically, we continued to gain share across the majority of categories and we believe, in aggregate. At the same time, our revenue was hindered by unprecedented product availability constraints across multiple vendors and categories, only some of which were anticipated. Additionally, there was considerably weaker-than-expected demand in the gaming category.”



For the current period, the company expects adjusted per-share earnings in the range of 35 cents to 40 cents, below the consensus estimate of 49 cents. Domestic comparable sales for the first quarter are expected in the range of down 1.5% to 2.5%.