Best Buy (BBY 42.50, -1.63) has given up 3.7% in pre-market action, as light revenue and cautious guidance overshadow a bottom line beat and a boost to the company's dividend and buyback.
The electronics retailer reported above-consensus fourth quarter earnings of $1.95 per share on a 1.0% year-over-year decline in revenue to $13.48 billion, which was short of expectations.
Best Buy's comparable sales declined 0.7%, which was on the low end of guidance for comparable sales between -1.0% and +1.0%. Furthermore, this report represented Best Buy's first set of comments on the holiday sales period after the company ended the practice of issuing separate statements regarding holiday sales.
Domestic revenue fell 1.4% year-over-year to $12.30 billion. This was due to the drop in comparable sales and the loss of revenue from closures of 11 large format and 31 Best Buy Mobile stores.
Domestic gross margin improved to 22.3% from 21.6% one year ago, thanks to improved margin rates in computing and home theater.
Declines in gaming, tablets, health & wearables, and mobile phones offset growth in connected home, computing, headphones, and home theater.
Domestic online revenue grew 17.5% year-over-year to $2.30 billion thanks to higher traffic and higher conversion rates. The increase reflected the continued trend among consumers to buy more things via the internet. Domestic online sales made up 18.6% of total domestic revenue, up from 15.6% one year ago.
International revenue rose 2.5% to $1.14 billion with comparable sales growing 0.9% year-over-year. International gross margin improved to 24.6% from last year's 21.8%.
Looking ahead, the company expects to see a continuation of a challenging sales environment. Best Buy expects that first quarter results will be soft relative to expectations, but the company expects a pick-up later in the year. First quarter earnings are expected between $0.35 and $0.40 per share while revenue is expected between $8.20 billion and $8.30 billion. For the full year, the company expects to generate revenue of about $40 billion.
In addition to reporting earnings, Best Buy announced that its Board of Directors approved a new $3 billion share repurchase program and a 21.0% increase to its quarterly dividend, which is now at $0.34 per share.