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

Sylvan Lake Library raises $600 for Christmas Bureau

Funds from the library’s coffee and cookie fundraiser were presented to the Christmas Bureau Dec. 5

Two dead in three-car collision on Hwy 11 near Alberta Springs Golf Course

Two women were pronounced dead on the scene of an accident Wednesday afternoon

Calgary police officer shares his story with Sylvan Lake parents and youth

A small audience listened to a presentation on bullying by Bullying Ends Here founder Tad Milmine

The best caesar in Canada can be found in Sylvan Lake

Kjeryn Dakin’s Tragically Hips caesar won the national Best Caesar in Town competition

Sylvan Lake Wranglers add a win after back-to-back home games

Wranglers fell 6-2 to the Medicine Hat Cubs Nov. 30, but won 3-0 over the Cochrane Generals Dec. 1

VIDEO: Federal Liberals’ throne speech welcomes opposition’s ideas

Trudeau will need NDP or Bloc support to pass legislation and survive confidence votes

Final appeal rejected for man convicted in deaths of missing Alberta seniors

Lyle and Marie McCann were in their 70s when they left their home in St. Albert in 2010 and vanished

Infants should be tested for autism if older siblings are diagnosed, Canadian study suggests

Blood test for infants with sibling who’s been diagnosed would get information to families earlier

Rural Alberta gets more police officers, but must pay for them directly

Premier wants areas to pay portion of overall costs on rising scale to bring in extra $200M by 2024

Rebels win second in row 5-2 over Moose Jaw

32 saves from Goalie Byron Fancy leads the way for Red Deer

Nearly 40% of Canadians want creationism taught in schools: poll

23% of Canadians believe God created humans in the past 10,000 years

Blackfalds RCMP lay charges following fatal pedestrian collision

35-year-old male died in the hospital as a result of injuries

Canadian families could pay nearly $500 more for food in 2020: report

Meat prices will increase the most, the report suggests

Most Read