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Best Buy (BBY) Tops Q4 EPS by 13c; Domestic Comps Rose 2%

March 3, 2015 7:03 AM EST

Best Buy (NYSE: BBY) reported Q4 EPS of $1.48, $0.13 better than the analyst estimate of $1.35. Revenue for the quarter came in at $14.21 billion versus the consensus estimate of $14.35 billion.

Domestic comps rose 2 percent and international comps fell 4 percent.

Hubert Joly, Best Buy president and CEO, commented, “In the fourth quarter, our teams delivered positive comparable sales, improved profitability and continued progress in our Renew Blue transformation. This resulted in a 1.3% increase in revenue to $14.2 billion and a 23% increase in non-GAAP diluted EPS to $1.48 versus $1.20 last year, primarily driven by growth in the Domestic segment. A compelling merchandise assortment and strong multi-channel execution drove these better-than-expected results as we capitalized on the product cycles in large screen televisions and mobile phones. These two categories were the primary drivers of our year-over-year revenue growth, and more than offset weakness in the tablet category which was impacted by material industry declines.”

Renew Blue Cost Reduction Initiatives Update:

Since the Q3 FY15 earnings release, Renew Blue annualized cost reductions have increased an additional $55 million, bringing the total Renew Blue annualized cost reductions to $1.02 billion ($710 million in SG&A expenses and $310 million in cost of goods sold). This $55 million in cost reductions ($15 million in SG&A and $40 million in cost of goods sold) is primarily driven by (1) lower costs associated with returns, replacements and damages; (2) supply chain efficiencies; and (3) efficiency improvements in the US and Canada.

In fiscal 2016, the company is launching Phase Two of its Renew Blue cost reduction and gross profit optimization program with a target of approximately $400 million in annualized operating income improvement over three years, including the remaining benefit of approximately $250 million from the company’s previously discussed returns, replacements and damages opportunity. These savings will be structural in nature and will be driven by streamlined processes and operational efficiencies that will be primarily enabled through investments in systems.

For earnings history and earnings-related data on Best Buy (BBY) click here.



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