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.

Just Posted

Ladysmith Little Theatre now showing The Dining Room

Opening night is Thursday, September 19 and the final performance is Sunday, October 6

Long-awaited Crofton road improvements finally happening

Paved shoulders on both sides will be a welcome addition

New ratepayers association forming in Area H

Organization will advocate for North Oyster, Yellowpoint and Diamond District residents

‘I shouldn’t have done it,’ Trudeau says of brownface photo

Trudeau says he also wore makeup while performing a version of a Harry Belafonte song

B.C. ‘tent city’ disputes spark call for local government autonomy

UBCM backs Maple Ridge after province overrules city

B.C. drug dealers arrested after traffic stop near Banff turns into helicopter pursuit

Antonio Nolasco-Padia, 23, and Dina Anthony, 55, both well-known to Chilliwack law enforcement

B.C. MLA calls on province to restrict vaping as first related illness appears in Canada

Todd Stone, Liberal MLA for Kamloops-South Thompson, introduced an anti-vaping bill in April

Chilliwack woman wins right to medically assisted death after three-year court battle

Julia Lamb has been the lead plaintiff in a legal battle to ease restrictions on Canada’s assisted dying laws

B.C. bus crash survivor petitions feds to fix road where classmates died

UVic student’s petition well over halfway to 5k signature goal

NDP, Liberals promise more spending, while Tories promise spending cuts

Making life more affordable for Canadians a focus in the 2019 election

UPDATE: Police probe third threat against a Kamloops high school in eight days

Police have not released any further details into what the threat includes

Most Read