Best Buy Company Inc. (BBY) recently reported third-quarter 2010 results. The quarterly earnings of 53 cents a share surpassed the Zacks Consensus Estimate of 43 cents and surged 51.4% from 35 cents delivered in the prior-year quarter.
The sustained growth in the top-line, disciplined cost management and lower effective tax rate buoyed the bottom-line growth. Even in this turbulent environment, plagued by heavy job losses and weak consumer spending, Best Buy was able to increase its market share. The company’s domestic market share rose 2.3% in the quarter.
Notebook computers, appliances, phones and flat-panel TVs were the strongest categories. These were offset by softness in gaming, music and movies.
Total revenue climbed 4.6% year-over-year to $12,024 million, reflecting the net addition of 127 stores in the last 12 months, and a 1.7% increase in comparable store sales, partially offset by adverse impact of foreign currency translation. Comps improved after falling 3.9% in the second-quarter 2010. Comps in the prior-year quarter had declined 5.3%.
The nation’s largest electronics retailer hinted that its fourth-quarter 2010 gross margin will be lower than anticipated.
Domestic revenue climbed 9% to $8,931 million, reflecting the net addition of 87 stores in the last 12 months, increased traffic count and 4.6% gain in comparable-store sales. Comps rose sequentially each month in the quarter, attaining an 8.4% increase in the month of November, favorably impacted by the Thanksgiving holiday shopping weekend.
Comps in the prior-year quarter had declined 6.3%. Domestic online sales jumped more than 20% due to a rise in website traffic.
International revenue dropped 6.4% to $3,093 million due to a 6.7% decline in comparable store sales and unfavorable impact of foreign currency translation, partially offset by net additions of 40 stores in the last 12 months. Comps in the prior-year quarter had improved marginally by 0.3%. Excluding foreign currency translation, international revenue fell 4%. Best Buy Europe posted a 3% decline in comparable-store sales.
The rise in market share, revenue growth experienced, along with signs of improvement in traffic count prompted management to raise its guidance.
Management now expects earnings in the range of $3.00 to $3.15 per share for fiscal year 2010, up from $2.70 to $3.00 predicted earlier, reflecting an increase of 4% to 9% year-over-year. The Zacks Consensus Estimate for the year is $2.96.
Revenue for the fiscal year 2010 is expected in the range of $49 billion to $49.5 billion, up from $48 billion to $49 billion forecasted previously. Comparable-store sales are expected to be flat to up 1% for the year.
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