Best Buy Stock Hits Record High Following Strong Q1 Report
Best Buy’s stock soared to a record high on Thursday, rising more than 21 percent from yesterday’s close, following a strong first quarter performance that surprised Wall Street.
The Nintendo Switch, a new, quick-to-sell-out gaming console, as well as other gaming and mobile products, pushed Best Buy’s revenue up 1 percent year-over-year to $8.53 billion. The Richfield-based retailer predicted its revenue wouldn’t likely top $8.3 billion.
Its online sales jumped 22.5 percent in the February to April period, as did sales at its brick-and-mortar locations. Same-store sales rose 1.6 percent during the company’s first quarter, a better turnout than the 1 to 2 percent decline it had estimated.
Its first quarter net earnings were $188 million compared to $229 million a year ago. However, that earnings difference, Best Buy said, was skewed due to large settlement proceeds it received in early 2016.
The company’s earnings per share, adjusted for one-time costs and expenses, came out to 60 cents a piece in the first quarter, a 40 percent increase over the 43 cents a share it reported last year. Both analysts and Best Buy had predicted earnings of 40 cents a share.
“We are energized about our opportunities and the strategy we are pursuing,” Best Buy CEO Hubert Joly said in a statement.
In a conference call Thursday morning, Joly told analysts that by 2021 the company is planning to save $600 million through cost-cutting measures. That money, he said, would go toward future investments.
Joly credited the late arrival of federal tax refund checks as one reason why Best Buy performed as well as it did in the first quarter. Looking forward, Best Buy set a high bar for the next quarter.
The company expects its revenue to jump again, finishing somewhere between $8.6 billion and $8.7 billion for the May through July period. During that time, it expects a 1.5 to 2.5 percent increase in same-store sales (a key retail metric measuring sales growth between new stores and those open a year or more).
For the full fiscal year, Best Buy revised its previous expectation of flat sales growth year-over-year. The company is now forecasting a one percent rise in sales on a 52-week basis.
As of midday Thursday, Best Buy stock was about $61—up nearly $11 from Wednesday’s close—the highest the stock has been priced since May 2006.