BBY 2009 Q1 Earnings - by BetterTrades

Before the opening bell on June 16, the nation’s leading seller of personal computers and other home office products, consumer electronics, entertainment software, major appliances and related accessories, Best Buy Co. Inc. (BBY) announced that the company’s 1Q earnings declined in comparison to the previous year’s earnings.

The main culprit for the decrease in income came as consumers remain cautious in a weakened economy, curtailing their discretionary spending and only making necessary purchases.

For the recent quarter, Best Buy booked net earnings of $153M, or $0.36 per share, in contrast to the previous year’s 1Q income of $179M, or $0.43 per share, a decline in profits of more than 14%. During the period, restructuring costs affected earnings by $25M, or $0.06 per share as the company overhauled their Best Buy Europe segment.

Excluding the one-time charges, Best Buy posted adjusted net earnings of $178M, or $0.42 per share, just below the prior year’s adjusted earnings. Meanwhile, the company’s overall sales totals were $10.1B, up more than 12% year-over-year from $8.99B.

Analysts, within the industry, were looking for the electronics retailer to post 1Q earnings of $0.34 per share on overall revenues of $10.13B.

During the quarter, Best Buy witnessed same store sales fall 6.2%, compared to last year’s increase in sales of 3.7%. Revenues were impacted positively during the period from the inclusion of Best Buy Europe’s sales, as well as the addition of 185 new stores in the European theatre opening during the past year.

"Our first quarter results reflect strong execution of our strategy in a difficult consumer environment. Once again, our teams grew market share and improved the gross profit rate while maintaining a disciplined approach to expense management," stated Jim Muehlbauer, Best Buy's Executive V.P. of finance and CFO.

Looking further into the report, Best Buy saw domestic sales increase marginally to $7.5B, as the company opened 115 stores throughout the U.S. In the domestic segment, same store sales retreated nearly 5% during the recent period.

Within their international unit, excluding the European markets, Best Buy observed overall revenues surge over last year’s tally, climbing more than 66% to $2.6B, helped tremendously by the unveiling of 70 new stores globally over the past 12 months.

For the year ahead, Best Buy is looking to post annual earnings between $2.50 and $2.90 per share, excluding any one-time charges. Revenues, in the meantime, are expected to come in between $46.5B and $48.5B annually. The company is also anticipating same store sales to remain flat to a 5% decline.

Analysts, on the other hand, have projected Best Buy to post yearly results of $2.79 per share based on annual sales of $47.4B.

Jim Muehlbauer commented on the prospect of the upcoming year, "Given the limited visibility to consumer spending in the back half of the year, along with the fact that a majority of the company's earnings are derived from the holiday selling season, it's prudent to maintain our original guidance at this point. We remain focused on executing on our strategic priorities, growing our market share and continuing to invest for future growth opportunities."

Following the company’s earnings announcement, investors were not blown away by Best Buy’s current condition and future outlook. By the sound of the closing bell on June 16, shares of BBY plunged more than 7%, falling $2.82 to end the session at $35.84 per share.

Over the course of a year, shares of Best Buy have traded as high as $47.50 and as low as $16.42 per share.

By BetterTrades