Best Buy (BBY) Holiday Comps Fell 1.4%; Cuts FCF Outlook

January 11, 2013 7:01 AM EST Send to a Friend
Best Buy Co., Inc. (NYSE: BBY) today announced revenue of $12.8 billion for the nine weeks ended January 5, 2013 compared to $12.9 billion for the nine weeks ended December 31, 2011.

Comps fell 1.4 percent in the 9-week period.

Best Buy’s Domestic segment online channel delivered revenue of $1.1 billion, a 10 percent revenue increase compared to the prior-year period, driven by a traffic increase. Best Buy’s strong online performance was recognized by various third parties, in particular:

* ComScore indicated Best Buy was in the top three most trafficked websites for the Thanksgiving holiday and Black Friday
* Experian data ranked Best Buy as the No. 3 retail website on Cyber Monday with 9.3 million visits

Domestic comparable store sales for the period were flat. The company recorded positive comparable store sales growth in mobile phones, tablets/eReaders and appliances. In contrast, comparable store sales in entertainment, televisions and computing declined.

The International segment comparable store sales decline of 6.4 percent was driven by comparable store sales declines in Canada and China. Sales results for all countries in the International segment other than Canada are reported on a one-month lag.

Fiscal 2013 Financial Guidance

Driven by solid performance in the holiday period, comparable store sales, gross margin, earnings and inventory levels continue to be in line with the assumptions that supported the company’s fiscal year 2013 free cash flow2 guidance provided on November 20, 2012 that was in the range of $850 million to $1.05 billion. Accounts payable as a percentage of inventories, however, which was assumed to be consistent with prior year, is now expected to be lower than prior year due to (1) the earlier than expected receipt, and therefore payment of, inventory purchases and (2) a shift in sales mix to higher velocity merchandise categories that carry shorter payment terms (note: overall vendor payment terms were consistent with prior year). As a result, the company now expects free cash flow for fiscal year 2013 to be approximately $500 million. As consistent with previous guidance, this free cash flow estimate excludes the impact of previously announced restructuring activities and change in restricted cash related to working capital.


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