Best Buy Co Inc (NYSE: BBY) reported fourth quarter financial year 2017 diluted earnings per share of $1.91 from continuing operations, an increase 37% from the year-ago period. Best Buy reported better than analyst expected earnings mainly driven by disciplined promotional strategy, continued optimization of merchandise margins and strong expense management, as stated by the company management. Best Buy Full Year GAAP and Non-GAAP diluted EPS increased 63% and 28% respectively.
Meanwhile, Best Buy enterprise revenue stood at $13.5 billion, although lower than $13.6 billion in tear ago period, he midpoint range of earnings guidance provided by the company. Operating income rate of BBY improved by 80 basis points. This was led by the company gaining in its domestic market share across major product categories and assortment quality. However, the company earnings were dented by weaker than expected demand in the gaming category.
In the domestic segment, comparable sales dipped 0.9% driving the domestic revenue down by 1.4% from same period a year ago. Best Buy Domestic online revenue surged 17.5% on a comparable basis primarily due to increased traffic and higher conversion rates. Best Buy International revenue increased 2.5% driven primarily by comparable sales growth of 0.9% primarily from the Mexico business.
Recording strong cash flows, Best Buy announced a 21% increase in its dividend to $0.28 per common share and a share repurchase plan that accelerates from $1 billion over two years to $3 billion over two years. Cash and cash equivalents at the end of the quarter stood at $2.24 billion compared to $1.98 billion in the year-ago period.
Looking ahead, Best Buy provided next quarter earnings per share guidance range of $0.35 – $0.40 while revenue guidance is in between $8.2 – $8.3 billion. Furthermore, terming fiscal 2018 ( the 53-week year) as the first step in building the new blue, the company is expecting enterprise revenue growth of approximately 1.5% and an operating income growth rate in the low single digits. On a 52-week basis, BBY targets approximately flat revenue and operating income.
Based on consensus analyst estimates of the market, Best Buy currently has a HOLD rating with the mean price target to be at $45.33. Meanwhile, the company stock price is trading currently at $44.13 which is down 4.4% in the days trading. Market sentiment indicates that the dip is due to less than expected gamers spending and non-availability of certain products leading to a sharp blow to the retailer’s stock.