Best Buy Co., Inc. BBY reported EPS of $0.54 vs. consensus of $0.60 and tax rate/lower share count benefited EPS by a ~$0.04 compared to J.P. Morgan's model.
“Total sales declined 1.1% with domestic comps of (5.0%) vs. (1.0%)E driven by industry and market share declines,” J.P. Morgan writes, noting that this weakness stands out in retail given the strong results being reported by most retailers.
“On the International front, comps were in line with our expectations, increasing 2.3% vs. 2.4%E.”
J.P. Morgan said that for most of 2009, sales came in strong but were offset by very disappointing gross margins (mix and promotions driven) and the company was forced to cut expenses to offset. In 2010, this trend reversed as “gross margin trends have provided upside, but sales have remained weak (and SG&A volatile).”
Best Buy currently trades at $35.32.
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