Shares of Best Buy Co. Inc. (BBY), were trading up +3.07 or +9.09 percent to $36.85 per share in this morning's premarket after announcing better than expected earnings for the company's first quarter ended on May 2nd. Best Buy stock closed at $33.78, down -1.20 or -3.43 percent in Wednesday's regular trading session.
Founded in 1966 as an audio specialty store, Richfield, Minnesota based Best Buy Co. renamed in 1983 concentrating more on consumer electronics. The company is the world's largest retailer of consumer electronics products operating over 1,100 stores domestically, as well as more than 100 Best Buy Express automated retail stores operated by Zoom Systems in malls and airports.
Best Buy posted earnings of $129 million, or $0.36 per share for the first quarter. This compares with $461 million or $1.31 per share in the same period one year ago. The large decline for year on year earnings was due to a tax change that boosted the figure by $1.01 per share in last year's first quarter.
With the exclusion of certain items, Best Buy reported it had earned $0.37 per share in the quarter compared to an analyst consensus of $0.29 per share. Revenue came to $8.56 billion versus $8.64 billion in last year's first quarter, analysts expected the company to report revenue of $8.46 billion.
In the company's press release, President and Chief Executive Officer, Hubert Joly said that, "Throughout the quarter, our strategy of delivering Advice, Service and Convenience at Competitive Prices' continued to resonate with our customers. While merchandising, marketing and operational execution were the tactical drivers of our better-than-expected first quarter financial results, strategically, we believe the cumulative impact of the progress we have made to improve our multi-channel customer experience is what has allowed us to consistently outperform the market. We have made real progress and it is showing up in our results."
Joly concluded saying, "While the Consumer Electronics industry is subject to product cycles, we are excited about the role that technology plays in people's lives and the opportunities that this creates. We are also confident that we are executing against the right investment strategy that will allow us to capitalize on key technology waves and customer-experience opportunities to build sustainable long-term shareholder value."
The company has been reorganizing since Joly took control in 2012. The company has been cutting costs and increasing services to consumers, which includes shipping goods from all of its stores. Best Buy has also launched a wedding registry on the company's website and is partnering with large suppliers such as Samsung for the development of home theatre areas in their stores.
Best Buy cited the reason for the decline in revenue was in part due to currency fluctuations and the consolidation of its Canadian brand last March. The company consolidated its Future Shop and Best Buy Canadian stores and websites, which led to the closure of 66 Future Shop stores and 65 Future Shop stores that converted to the Best Buy brand. Best Buy also cut 500 full time jobs and about 1,000 part time positions. Best Buy stock has declined over -10 percent since the March announcement, but is still up over +35 percent for the year.
Other News About BBY
The large discount is contingent on the signing of a two year lease with Sprint.
Traders put "a lot of weight" on sales numbers, according to a top trader.
Other Stocks in the News
Shares dropped -18 percent in this morning's premarket after the news.
The $98 per share bid includes the assumption of $2.3 billion in debt.