LONDON, UK / ACCESSWIRE / September 19, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Best Buy Co., Inc. (NYSE: BBY), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=BBY, following the Company's disclosure of its second quarter ended July 29, 2017 (Q2 FY18) on August 29, 2017. The consumer electronics retailer outperformed top- and bottom-line expectations and also raised its top line guidance for fiscal 2018. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:

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Earnings Reviewed

For the quarter ended July 29, 2017, Best Buy reported revenues of $8.94 billion compared to revenue of $8.53 billion in Q2 FY17. The Company's revenue beat analysts' expectations of $8.66 billion. Best Buy achieved higher-than-expected comparable sales growth across most of its categories, driven by increasing consumer demand for technology products and by the strong strategic execution. Moreover, the Company benefitted from its effective merchandising and marketing activities, coupled with expert advice and online services ? in-store and in-home.

For Q2 FY18, Best Buy reported GAAP diluted earnings per share from continuing operations of $0.67, an increase of 20% from $0.56 in Q2 FY17. The Company's non-GAAP diluted earnings per share from continuing operations were $0.69, an increase of 21% from $0.57 in the prior year's same quarter. Best Buy's earnings beat Wall Street's expectations of $0.63 per share.

Best Buy's Segment Details

Domestic Segment - In Q2 FY18, domestic segment revenue reached $8.27 billion, an increment of 5.4% compared to $7.89 billion in Q2 FY17. This was driven by comparable sales growth of 5.4%, which was partially offset by a loss of revenue from 11 large format and 42 Best Buy Mobile store closures. At the same time, comparable sales growth in computing, wearables, smart home, mobile phones, and appliances was partially offset by declines in tablets.

Moreover, the domestic online revenue touched $1.1 billion, 31.2% higher than last year. This is mainly due to higher conversion rates and increased traffic.

For Q2 FY18, the Company's domestic GAAP and non-GAAP gross profit rates remained the same as last year at 24% due to improved margin rates in categories such as appliances, tablets, and home theater, offset by the margin pressure in the mobile category and the negative impact of higher sales in the lower-margin wearables category.

International Segment - In Q2 FY18, revenue from the international segment reached $668 million, an increment of 3.7% from $644 million in Q2 FY17, which was driven by comparable sales growth of 4.7% due to growth in Canada as well as Mexico. However, the comparable sales growth was partially offset by nearly 220 basis points of negative foreign currency impact. In Q2 FY18, International GAAP and non-GAAP gross profit rate was 25.1% compared to 25.9% in Q2 FY17. This decline can be attributed to a lesser y-o-y gross profit rate in Canada due to lower rates in the computing and appliance categories.

Share Repurchases

During Q2 FY18, Best Buy returned approximately $501 million to shareholders through share repurchases and dividends. On a year-to-date basis, the Company returned a total of $979 million to shareholders through share repurchases and dividends.

On March 01, 2017, the Company had shared its plans to repurchase $3 billion of its shares over a two-year period. In Q2 FY18 itself, it repurchased 7.3 million shares for a total sum of $398 million. Its cumulative share repurchases, net of dilution from equity-based awards, positively benefitted GAAP and non-GAAP diluted EPS by around $0.02 in Q2 FY18.

Outlook and Financial Guidance for FY18

Best Buy CFO, Corie Barry, announced that the Company had increased its top-line guidance. It is now expecting full-year FY18 revenue growth of around 4.0% compared to the previous outlook of 2.5%. As far as profitability is concerned, Best Buy is anticipating a full year non-GAAP operating income growth of 4.0% to 9.0% compared to the former growth outlook of 3.5% to 8.5%. This is indicative of a stronger-than-originally-expected second half revenue performance with profitability mostly in-line with its previous expectations.

Best Buy's improved outlook can be attributed to the continued positive industry and consumer momentum along with the positive impact of product launches. The Company has also made certain strategic decisions to proactively make additional Q3 and Q4 investments which continue to drive it's Best Buy 2020 strategy forward. These additional investments will be in areas like customer choice and shipping, e-commerce, and the Company's long-term strategic vision for the supply chain.

Best Buy has provided the following Q3 FY18 financial outlook:

  • Enterprise revenue in the range of $9.3 billion to $9.4 billion;
  • Enterprise comparable sales growth of 4.5% to 5.5%;
  • Domestic comparable sales growth of 4.5% to 5.5%;
  • International comparable sales change of flat 3.0%;
  • Non-GAAP effective income tax rate of 32.0% to 32.5%;
  • Diluted weighted average share count of approximately 305 million;
  • Non-GAAP diluted EPS of $0.75 to $0.803.

Best Buy's FY18 financial outlook includes the following:

  • Enterprise revenue growth of nearly 4.0%;
  • Enterprise non-GAAP operating income growth rate of 4.0% to 9.0%;
  • Enterprise non-GAAP effective income tax rate of around 34.5%;
  • Enterprise revenue growth of around 2.5% on a 52-week basis;
  • Enterprise non-GAAP operating income growth rate of 2.0% to 6.0% on a 52-week basis.

Stock Performance

At the closing bell, on Monday, September 18, 2017, Best Buy's stock slipped 2.15%, ending the trading session at $57.35. A total volume of 3.37 million shares have exchanged hands. The Company's stock price skyrocketed 2.80% in the last three months, 25.91% in the past six months, and 50.92% in the previous twelve months. Moreover, the stock soared 34.40% since the start of the year. The stock is trading at a PE ratio of 15.22 and has a dividend yield of 2.37%. The stock currently has a market cap of $17.09 billion.

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