Best Buy Stock Climbs 16% on Holiday Sales Report
Best Buy’s stock closed up more than 16 percent Friday on news that its same-store sales during the holiday season were essentially flat—welcome news on the heels of several quarters of declines.
Richfield-based Best Buy said Friday that sales for the nine-week period that ended January 5 totaled $12.8 billion, compared to $12.9 billion during last year’s holiday season.
Domestic same-store sales—sales at stores and websites operating for at least 14 months and a key measure of a retailer’s health—were flat during the period. Same-store growth in mobile phones, tablets, e-readers, and appliances were offset by declining sales in entertainment products, televisions, and computers.
International same-store sales slid 6.4 percent, driven by declines in Canada and China. Companywide, same-store sales slid 1.4 percent.
Shares of Best Buy’s stock closed up 16.4 percent Friday at $14.21. The company’s shares dropped roughly 50 percent in 2012, and according to a Bloomberg report, Friday’s climb was the biggest gain since December 2008.
“During the most important period in the retail calendar—the holiday sales season—we were able to improve our domestic comparable-store sales trends compared to the performance of the last several quarters and continue our strong traffic growth in our online business,” President and CEO Hubert Joly said in a statement. “While it will be a journey with ups and downs, we are focused on becoming an increasingly effective multi-channel retailer and engaging with the tens of millions of consumers who shop us online and in-store.”
Best Buy founder Richard Schulze resigned from the company’s board last year and said in August he was considering taking the company private. He struck a deal with the board that granted him access to the company’s non-public financial information in order to put together a formal buyout offer. The deal initially gave Schulze until mid-December to make a bid, but last month, the deadline was pushed back to February.
Erik Gordon, a business and law professor at the University of Michigan, told Bloomberg that the holiday sales results reported Friday “make it more likely that Schulze can put a deal on the table with domestic same-store sales stable.”
“It also gives the board greater bargaining power now that they’ve got the first glimmer of a turnaround,” he reportedly said. “It was not the disaster that people were fearing.”