Best Buy, the largest U.S. consumer electronics chain, on Tuesday reported higher-than-expected quarterly earnings on a strong holiday season and said it would buy back stock for the first time since 2012.
Chief Executive Officer Hubert Joly said on a conference call that Best Buy planned this year to start a cost-cutting effort to save $400 million over the next three years. It will also focus on improving merchandising, opening new store-in-store formats under its television and kitchen businesses and increase private-label products this fiscal year.
Best Buy authorized a $1 billion share buyback over three years and announced a special dividend of about $180 million, or 51 cents per share, from proceeds from settlements of a lawsuit on price-fixing of TFT-LCD panels.
The company's shares rose 1 percent to $39.05 in morning trading as investors appeared to shrug off lower-than-expected revenue.
Best Buy's sales at stores open at least a year increased 2 percent during the fourth quarter ended on Jan. 31, slightly more than the 1.9 percent rise estimated by analysts polled by research firm Consensus Metrix.
U.S. same-store sales rose 2.8 percent, the second straight quarter of growth after three quarters of decline.
Net income attributable to Best Buy shareholders jumped to $519 million, or $1.46 per share, from $293 million, or 83 cents per share, a year earlier.
Excluding special items, the company earned $1.48 per share from continuing operations. Analysts on average had expected $1.35, according to Thomson Reuters I/B/E/S.
The company said it benefited from increased sales of higher-margin products such as large-screen TVs and mobile phones during the holiday shopping season.
Revenue rose about 1 percent to $14.21 billion. Analysts had expected $14.35 billion.
Selling, general and administrative expenses fell to $2.22 billion from $2.26 billion.
The quarterly results exclude Best Buy's China business, which the company said in December it would sell to real estate firm Zhejiang Jiayuan Group so it could focus on its North American operations.
Since 2012, Best Buy has cut jobs, removed layers of management and closed stores.
The company expects the effects of these actions to persist this year. In January, it forecast flat to lower same-store sales for its first two fiscal quarters, citing low demand for computers and tablets.
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