Ahead Of Best Buy's Q4 Results

(RTTNews) - Consumer electronics retailer Best Buy Co. Inc. (BBY) is set to release its fourth-quarter results before the bell on Thursday, February 25, with analysts surveyed by Thomson Reuters estimating earnings of $1.39 per share on revenue of $13.61 billion. Analysts' estimate typically exclude certain special items.

In mid-January, Best Buy reported Domestic revenue of $10.1 billion for the nine weeks ended January 2, 2016, a decrease of 0.8% from last year, primarily due to a comparable sales decline of 1.4%, excluding the estimated 20-basis point benefit associated with the classification of revenue for the mobile carrier installment billing plans and the loss of revenue from closed stores. International revenue was $911 million for the period, a decrease of 26.1% versus last year.

Following the disappointing holiday sales, Best Buy updated fourth-quarter outlook. In the Domestic business, the company now expects: revenue decline of near 1.5% versus its previous expectation of near flat, due to softer consumer demand in mobile phones and greater-than-expected declines in the NPD-reported categories; and a non-GAAP operating income rate decline of 10 - 15 basis points versus previous expectation of a rate decline of 20 - 35 basis points.

The company's Enterprise outlook includes: a revenue decline of near 4% versus previous expectation of a low single-digit decline; and a non-GAAP operating income rate decline of about 15 - 30 basis points versus previous expectation of a rate decline of 25 - 45 basis points. In the International business, the company's outlook has not changed.

From a tax rate perspective, the company now expects the non-GAAP effective income tax rate from continuing operations to be in the range of 34.5% - 35%, versus 34.2% last year, which is expected to result in a negative $0.01 to negative $0.03 year-over-year non-GAAP EPS impact in fourth quarter 2016.

In the previous quarter...

The company's third quarter net income from continuing operations to shareholders was $129 million or $0.37 per share compared to $116 million or $0.33 per share, last year. Non-GAAP net income was $144 million or $0.41 per share compared to $121 million or $0.34 per share, prior year. Analysts expected earnings of $0.35 for the quarter.

Revenue was $8.82 billion compared to $9.03 billion, a year ago. Analysts expected revenue of $8.86 billion for the quarter. Domestic revenue of $8.1 billion increased 1.2% from last year. In the Domestic business, comparable sales, excluding the impact of installment billing, increased 0.5%.

Sharon McCollam, Best Buy CFO, stated, "The 4.3% decline we saw in the NPD-reported categories got progressively worse throughout the quarter, which adds a level of caution to our outlook."

Hubert Joly, Best Buy chairman and CEO, said: "The NPD industry declines that we saw in the third quarter, both sequentially and year-over-year, may continue throughout this year's fourth quarter. We have also made incremental investments in services pricing and SG&A that are putting pressure on our fourth quarter earnings outlook."