Best Buy stock leaps 16% on holiday-season results
Shares of Best Buy Co. jumped more than 16% after the electronics giant had a better-than-expected showing during the crucial holiday season.
Although results for the entire fourth quarter are not expected to be released until Feb. 28, analysts say strong online sales and better traffic into its U.S. stores during the holiday season are positive signs for the struggling retailer.
Wall Street responded by sending shares of Best Buy up $2, or 16.4%, to $14.21.
Still, some results from Best Buy were below those for the same period a year earlier. For the nine weeks that ended Jan. 5, the Minneapolis company posted revenue of $12.8 billion, down from $12.9 billion.
Sales at stores open at least a year, considered a key gauge of a retailer’s health, dropped 1.4%, which was better than expected. International comparable-store sales plunged 6.4%, and domestic sales were flat.
Online revenue over the holidays jumped 10% year over year. Best Buy said categories such as tablets, cellphones and e-readers enjoyed the strongest results, while sales fell in televisions and entertainment.
“That tells me Best Buy is making the transition they need to make in order to compete as an online retailer instead of being a showroom,” said Ron Friedman, a retail expert at advisory and accounting firm Marcum in Los Angeles. “Best Buy did pretty good, all things considered.”
The company has been trying to implement a turnaround strategy as it fights increased competition from online retailers such as Amazon.com Inc.
Chief Executive Hubert Joly, who took over in August, said increased worker training and a price-match policy helped deliver a holiday season that was an improvement over the last several quarters.
“While it will be a journey of ups and downs, we are focused on becoming an increasingly effective multi-channel retailer and engaging with the tens of millions of consumers who shop us online and in stores,” he said in a statement Friday.
Last year, Best Buy ousted its previous chief executive, Brian Dunn, after discovering he had engaged in an inappropriate relationship with a female employee. Co-founder Richard Schulze then left the company after an investigation found that he knew of Dunn’s relationship but failed to report it to the board. He has since made overtures to take over the company.
The mixed holiday results may prompt another takeover bid from Schulze. Best Buy is giving him until the end of February to make an offer.
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