Best Buy Emulates Its Name (BBY)

Best Buy (NYSE: BBY) has posted $0.53 EPS versus $0.41 estimates from First Call and posted $9.92 Billion revenues versus a $9.45 Billion revenue estimate from First Call.  The company has also raised its full year guidance to $3.10 to $3.20 versus a prior target of $3.00 to $3.15 EPS, although estimates are roughly $3.12 on last look. It also forecast roughly $40 Billion in annual revenues with a same store sales growth pegged at 4%.

For the quarter, Best Buy’s same store sales rose 6.7% and its Operating income as % of revenue rose to 3.5% from 2.3% in the November quarter of 2006.

One area analysts could harp on is that the merchandise inventory increased 22% year over year. Best Buy says this reflects new store growth and an increased availability of products such as video gaming, flat-panel TVs and notebook computers.  It also reflects the impact of the calendar shift, as the quarter ended one week further into the holiday shopping season.  So if you are a skeptic you can harp on it having too much inventory, and if you are a bull you can easily justify this surge in inventory.

Best Buy shares are up 1% at $51.75 in pre-market trading, although shares were up 4% initially.  Its 52-week trading range has been $41.85 to $53.90.

Jon C. Ogg
December 18, 2007