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

South Okanagan man honoured with lifetime achievement award

The late Nick Bevanda to receive a lifetime achievement award for his architecture work

South Okanagan dangerous offender guilty plea struck down

Trial delayed again because Ronald Teneycke failed to elect his choice of trial

South Okanagan-West Kootenay candidates talk climate change and environment at recent forum

Forum on Tuesday grilled candidates about plan to bring about low carbon emission economy

Ellis Creek restoration comes with $30 million price tag for Penticton

Residents are able to provide feedback on the restoration plan until Nov. 1

City of Penticton weighs need for a manager of social development

Members of council are divided on whether the position is necessary

Competition shakes up for the Okanagan Mixoff

The Okanagan Mixoff takes place Nov. 7 in Kelowna

Fatal overdoses down by 33% in B.C., but carfentanil deaths continue to spike

Carfentanil, an illicit drug more powerful than fentanyl, causing more deaths than ever

Six bears destroyed in three days in West Kelowna

A West Kelowna business has been charged for leaving garbage around Lake Okanagan Resort

West Kelowna Warriors being sold back to BC Hockey League

Current owner Kim Dobranski said the sale back to the BCHL should be completed by the end of October

Police standoff ends peacefully in West Kelowna

A distraught man was taken into custody Wednesday afternoon

A year after pot legalization in Canada, it’s a slow roll

It’s one year into Canada’s experiment in legal marijuana, and hundreds of legal pot shops have opened

ELECTION 2019: Climate strikes push environment to top of mind for federal leaders

Black Press Media presents a three-part series on three big election issues

Most Read