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Consumer electronics retailer Best Bu y ( BBY ) reported better-than-expected fiscal fourth-quarter results early Thursday, but it continues to face declining sales overall and in key categories, and its guidance missed Wall Street estimates. Best Buy stock was up 2%, above 32, in afternoon trading on the stock market today , as investors cheered the announcement of a special cash dividend and higher quarterly dividend. Best Buy said it will pay a special dividend of 45 cents a share, or about $145 million, related to the net after-tax proceeds of certain legal settlements and asset disposals. The retailer also boosted its regular quarterly dividend by 22% to 28 cents a share. Plus, Best Buy announced a new $1 billion share-repurchase plan expected to be completed over the next two years. Best Buy CEO Hubert Joly said the company aims to be a “premium dividend payer,” with a non-GAAP dividend payout ratio between 35% to 45%. In its fourth quarter ended Jan. 30, the Richfield, Minn.-based company earned $1.53 a share excluding items on sales of $13.62 billion. Analysts polled by Thomson Reuters expected Best Buy to earn $1.39 a share on sales of $13.61 billion. On a year-over-year basis, EPS rose 3% and sales fell 4%. Under generally accepted accounting principles (GAAP), Best Buy’s earnings per share fell 5% to $1.39. Best Buy’s same-store sales slipped 1.8% in Q4. But the company’s e-commerce sales jumped nearly 14% to $1.95 billion, accounting for 15.6% of total U.S. revenue. In its online sales segment, Best Buy competes with industry powerhouse Amazon.com ( AMZN ). Growth in health and wearables, home theater and major appliances was more than offset by “significant declines” in mobile phones, tablets and digital cameras, Best Buy said in a press release . For the current quarter, Best Buy expects to earn 31 to 35 cents a share, vs. 37 cents a year earlier. The midpoint of 33 cents a share would represent a year-over-year decline of 11%. It sees sales falling 3% to $8.3 billion based on the midpoint of guidance. Best Buy Sees Growth Later In Year Analysts polled by Thomson Reuters were modeling for Best Buy to earn 38 cents a share on sales of $8.4 billion. Best Buy Chief Financial Officer Sharon McCollam said the retailer expects to see sales decline in the first half of the fiscal year, followed by growth in the back half. Best Buy is targeting flat domestic revenue for the full year. Appliances, home theater and connected home products are likely to be the top growth categories, she said. Best Buy said it will counter soft overall-sales growth in consumer electronics by focusing on market share gains and by making operational improvements to boost profits. On a conference call with analysts, Joly spoke about the product categories that will drive Best Buy sales. Household appliances, connected home products and large-screen ultra HD or 4K televisions are bright spots, he said. Virtual reality headsets are a new category that Best Buy is “very excited about,” Joly said. “This is an interesting category,” he said. “It will be small this year. It may help in the computing category with (sales of) higher-end computers because you’re going to need that computing power. But from a financial perspective, it’s going to be limited.” Three VR platforms are coming to market this year: Facebook ’s ( FB ) Oculus Rift, HTC Vive and Sony ’s ( SNE ) PlayStation VR. Scalper1 News
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