Best Buy (NYSE: BBY) reported Q4 EPS of $1.95, $0.28 better than the analyst estimate of $1.67. Revenue for the quarter came in at $13.48 billion versus the consensus estimate of $13.62 billion.

• A new $3 billion share repurchase plan expected to be completed over the next two years; and
• A 21% increase in the regular quarterly dividend to $0.34 per share, effective immediately.

GUIDANCE:

Best Buy sees Q1 2018 EPS of $0.35-$0.40, versus the consensus of $0.49.

“In the fourth quarter, we delivered Enterprise revenue of $13.5 billion, near the midpoint of our guidance range, improved our operating income rate by 80 basis points and delivered significantly higher-than-expected EPS growth. On a full year basis, we delivered the topline performance we outlined at the beginning of the year – with materially better earnings than originally expected,” said Hubert Joly, Best Buy chairman and CEO.

Joly continued, “Our strong bottom-line performance in the fourth quarter was driven by a disciplined promotional strategy, continued optimization of merchandise margins and strong expense management. Domestically, we continued to gain share across the majority of categories and we believe, in aggregate. This was due to the quality of our assortment, a strong advertising and promotional cadence, and a superior customer experience across channels. At the same time, our revenue was hindered by unprecedented product availability constraints across multiple vendors and categories, only some of which were anticipated. Additionally, there was considerably weaker-than-expected demand in the gaming category. I am proud of what we were able to achieve this quarter and want to thank all of our associates for their hard work, dedication and customer focus.”

Joly continued, “Since the introduction of Renew Blue in November 2012, we have improved the operating performance of the business dramatically. We now feel it is time to call Renew Blue officially over and launch our strategy for the next phase of our journey: Best Buy 2020: Building the New Blue.

“In this next phase, we go from turning the company around to shaping our future and creating a company customers and employees love that continues to generate a superior return for our shareholders. We are driven by our purpose to help customers pursue their passions and enrich their lives with the help of technology. Our growth strategy is centered around three pillars, which are to (1) maximize the multi-channel retail business; (2) provide services and solutions that solve real customer needs; and (3) accelerate growth in Canada and Mexico. Fiscal 2018 is our first step in Building the New Blue and we are executing against four priorities: (1) explore and pursue growth opportunities around the pillars; (2) improve execution in key areas; (3) continue to reduce cost and drive efficiencies throughout the business; and (4) build the capabilities necessary to deliver on the first three priorities, which will involve making investments in people and systems,” Joly concluded.

Best Buy CFO Corie Barry commented, “For fiscal 2018, which is a 53-week year, we are expecting Enterprise revenue growth of approximately 1.5% and an operating income growth rate in the low single digits. On a 52-week basis, we are targeting approximately flat revenue and operating income.

“Our annual outlook is influenced by a number of factors, including expected share gains and the positive impact from our new initiatives, offset by our assumption that the industry growth will remain negative, similar to the last two years, and product availability issues will continue, particularly in the first half of the year. We are also expecting our investments and ongoing pressures in the business, including approximately $60 million of lower profit share revenue, to be offset by a combination of returns from new initiatives and ongoing cost reductions and efficiencies. We expect to continue to generate strong cash flow and return excess cash to shareholders. Today we announced a 21% increase in our dividend and a share repurchase plan that accelerates from $1 billion over two years to $3 billion over two years.”

Barry concluded, “Of course, our quarterly performance can fluctuate based on a number of factors including product cycles, inventory availability and industry dynamics. Our Q1 FY18 guidance reflects the softness we have seen reported so far this quarter in the NPD-tracked categories and continued softness in the mobile phone category due both to last year’s product recall and the assumption that new phone launches will occur later in the quarter than they did last year.”

FY18 Financial Guidance

Note: FY18 has 53 weeks compared to 52 weeks in FY17. The extra week occurs in Q4 FY18.

Best Buy is providing the following full year FY18 financial outlook:

• Enterprise revenue growth of approximately 1.5% on a 53-week basis
• Enterprise non-GAAP operating income growth rate in the low single digits on a 53-week basis4
• Enterprise revenue approximately flat on a 52-week basis
• Enterprise non-GAAP operating income approximately flat on a 52-week basis
• Enterprise non-GAAP effective income tax rate of approximately 36.5%

Best Buy is providing the following Q1 FY18 financial outlook:

• Enterprise revenue in the range of $8.2 billion to $8.3 billion
• Enterprise comparable sales change in the range of (1.0%) to (2.0%)
• Domestic comparable sales change in the range of (1.5%) to (2.5%)
• International comparable sales change in the range of flat to 3.0%
• Non-GAAP effective income tax rate of 38.0% to 38.5%4
• Diluted weighted average share count of approximately 313 million
• Non-GAAP diluted EPS of $0.35 to $0.404

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