A very merry Christmas at Best Buy with sales booming

Shares soared more than 15 per cent in late morning trading

Best Buy put up some big holiday sales numbers Wednesday, more evidence that Americans are willing and able to spend on gadgets and big TVs.

The nation’s consumer electronics chain delivered a better-than-expected 3 per cent increase in sales at established stores for the fiscal fourth quarter. The company also issued an annual profit forecast that was roughly in line with Wall Street expectations.

Shares soared more than 15 per cent in late morning trading.

A dire report from the U.S. Commerce Department this month on retail sales cast a pall over the sector, raising concerns that an extended period of elevated consumer confidence had ended abruptly. But the holiday business has proven to be a mixed bag as some retailers are responding faster to a more competitive landscape as well as a shoppers’ shift to online.

Other notable retailers like Walmart also had big holiday quarters. T.J. Maxx parent reported on Wednesday strong sales driven by more customer visits. Macy’s slogged through a tough holiday season and said on Tuesday that 2019 would remain challenging. Meanwhile, a slowdown in the housing market is tempering sales at home improvement chains Home Depot and Lowe’s.

J.C. Penney, Target and Nordstrom are among the retailers that are slated to report final fourth-quarter figures in the next few days.

Still, a slowdown in the economy could present challenges to retailers. And declining tax refunds could dampen spending in the first quarter. In fact, Best Buy acknowledged that it has seen some weakness in sales during the current quarter as the volume and dollar amount of tax refunds has fallen. It said it was monitoring the situation.

Nevertheless, Best Buy has excelled in holding off increasing competition from Amazon and other players by expanding its online business, speeding up deliveries and adding more services to enhance its relationship with its customers. Online sales now account for 22 per cent of its U.S. business.

It was only a few years ago when skeptics were ready to write the obituary of Best Buy. But under Hubert Joly, who took over the helm as CEO in 2012, the company is being reinvented. While the chain is focusing on driving online revenue, it’s also working to build deeper relationships and increase total revenue from customers who are shopping both online and in stores. That means reducing the time a customer has to spend at the pickup counter.

It’s also means expanding services. Its free adviser service where salespeople visit customers at home to make recommendations on TVs and other electronics has been doing well. As of the latest quarter, it has signed up more than one million members.

The company is also pushing more into the health field, acquiring a company last year called GreatCall that provides emergency response devices for the aging.

Additionally, Best Buy said that it now offers same-day delivery on thousands of items in 40 metropolitan areas and next day delivery in 60 metropolitan areas.

“Historically…we’ve been focused on transactions and selling products,” Joly told investors during the earnings call on Wednesday. “We’re moving toward selling solutions and building relationships. This journey is at the beginning and we’re learning.”

The Richfield, Minnesota, company, posted per-share earnings of $2.72, beating last year’s fourth quarter’s $2.42. It also topped the $2.56 that analysts were expecting, as well as its own previous guidance. For the year, earnings per share came in at $5.32, surpassing last year’s $4.42.

The company estimates earnings for the next fiscal year to be in the $5.45 to $5.65, which is roughly in line with the $5.49 that Wall Street has been projecting.

The nation’s biggest consumer electronics retailer said comparable-stores sales, a key indicator of a company’s health, rose 4.8 per cent for the year, extending its streak to five years of growth.

Best Buy raised its quarterly dividend by 11 per cent, to 50 cents per share. The board of directors also approved a new $3 billion stock repurchase, replacing an existing authorization to repurchase $1.5 billion of the company’s shares.

Shares rose $9.39 per share to $69.72 in late morning trading.

AP Business Writer Matt Ott in Madrid contributed to this report.

Anne D’Innocenzio And Matt Ott, The Associated Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Fraser Valley Regional Library branches offer curbside pick up

After two and a half months of being closed, people can once again check books out of the library

EDITORIAL: Why I wear a mask and you should, too

Editor Adam Louis says it’s about more than the practical

School board briefs: SD78 planning for June re-start of in-classroom learning

Board says goodbyes to trustee Koopman, Coquihalla school talks recycling, absenteeism

‘My spirit hurts, I want her home’: Family shares pain, fond memories at vigil for April Parisian

The 45-year-old Indigenous woman, who made her home in Spuzzum, has been missing since early April

District of Kent reopening facilities to the public

Enhanced COVID-19 protocols in place throughout

11 new COVID-19 cases in B.C. as top doc urges caution amid ‘encouraging’ low rates

Dr. Bonnie Henry also announced that two care home outbreaks would be declared over

Facing changes together: Your community, your journalists

The COVID-19 pandemic has changed the world in ways that would have… Continue reading

Police watchdog investigating death of man in Delta

Independent Investigations Office asking for witnesses to May 29 incident at Tsawwassen ferry terminal

Surrey mayor’s party under fire for ‘sickening’ tweet accusing northern B.C. RCMP of murder

Mayor Doug McCallum says tweet, Facebook post ‘sent out by unauthorized person’

Father’s Day Walk Run for prostate cancer will be virtual event this year throughout B.C.

The annual fundraiser for Prostate Cancer Foundation BC has brought in $2.5 million since 1999

Dr. Bonnie Henry announces official ban on overnight kids’ camps this summer

New ban comes after talking with other provincial health officials across the country, Henry says

Senior man in hospital after unprovoked wolf attack near Prince Rupert

Conservation officers are on site looking for the wolf

VIDEO: NASA astronauts blast off into space on SpaceX rocket

Marks NASA’s first human spaceflight launched from U.S. soil in nearly a decade

‘I knew what he wanted’: Kootenay man spends hours in tree as black bear patrols below

Francis Levasseur is no stranger to the outdoors, but a recent run-in with a bear caused quite a scare

Most Read