Best Buy shares tumble 8 percent as revenue, outlook fall short

Wednesday issued guidance for first-quarter adjusted earnings and revenues, below market estimates.

Enterprise comparable sales declined 0.7 percent, compared to a 1.7 percent drop a year ago.

Revenues fell 1% from previous year to $13.48 billion, missing analysts' view for $13.62 billion.

The company's stock was down 9 percent in premarket trading though as the company forecast lower sales for the coming quarter as well as lower earnings per share than analysts were expecting.

Best Buy expects first-quarter 2018 adjusted diluted EPS in a range of $0.35 to $0.40.

For the coming year, Best Buy forecast flat revenue and operating income on a 52-week basis based on the assumption the company will continue to gain market share while the overall electronics industry will remain negative, as it has been the last two years.

Domestic revenue of $12.3 billion decreased 1.4 percent, mainly driven by a comparable sales decline of 0.9 percent. Domestic same-store sales fell 0.9%, compared with the FactSet consensus of a 0.4% increase. Sales totaled $13.48 billion, down from $13.62 billion past year, and below the $13.62 billion FactSet consensus. The company's cumulative share repurchases, net of dilution from equity based awards, positively benefited GAAP and non-GAAP diluted EPS by $0.14 in the fourth quarter.

"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", CEO Hubert Joly said in a statement. Operating income rate of BBY improved by 80 basis points. He also pointed to "considerably weaker-than-expected demand in the gaming category".

In Best Buy's much smaller global segment, revenue increased 2.5%, driven by growth in Mexico.

Best Buy also announced a 21% boost to its quarterly dividend, from $0.28 per share to $0.34, effective immediately. Eight analysts surveyed by Zacks expected $13.61 billion.

For the full year, Best Buy's guidance was in-line with analysts' view. Earnings per share were $1.91, higher than $1.40 a year ago. They had risen 34% over the past 12 months through Tuesday's close.

  • Zachary Reyes