Mar 3, 2015 11:29 AM
Best Buy hikes shareholder dividend, offers one-time payment
The Associated Press
Best Buy Co. raised its quarterly dividend 21 percent and plans to give shareholders an additional one-time payment after the nation's largest electronics chain reported a better-than-expected fourth-quarter profit.
The Minneapolis-based company said it will raise its cash dividend to 23 cents per share from 19 cents, and it will pay shareholders a one-time dividend of 51 cents per share culled from the proceeds of some legal settlements over the price of liquid crystal displays, or LCDs, sold in the United States.
The settlements stem from litigation against technology makers over claims that they conspired to fix LCD prices. LCD technology is used in items like flat-panel TVs, computers and phones.
Best Buy will pay the special cash dividend and the increased regular quarterly payout on April 14 to shareholders of record at the close of business on March 24.
Under CEO Hubert Joly, who took the helm in 2012, the Richfield, Minnesota-based Best Buy has been cutting costs and revamping stores to improve results as it faces competition from online retailers and discount stores. It's been also rolling out services like shipping goods from all its stores, which means speedier deliveries.
It's been working with big suppliers like Samsung to develop home theater areas for shoppers to check out. It's also increased its online sales to 9.8 percent its total from 7 percent two years ago. The moves have helped improve profit margins and drive sales.
Best Buy is planning a number of initiatives for the current year. It aims to focus on improving merchandise and just launched a wedding registry on its website. But the company is still facing falling prices for popular items like TVs and weaker demand for products like tablets and computers.
In fact, it reiterated that it expects flat to declines of low single digits in revenue in stores open at least a year for the current quarter and second fiscal quarter.
"Clearly, we are gaining share," Joly told The Associated Press on Tuesday. He noted Best Buy also expects to see a positive impact from the closing of hundreds of RadioShack stores as part of its Chapter 11 reorganization.
Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors, said that the big reason why RadioShack is facing a different fate is that their stores were too small to sell flat-panel TVs and home theater products that shoppers really want.
Best Buy said its net income jumped 77 percent to $519 million, or $1.46 per share, for the quarter that ended Jan. 31. Earnings, adjusted for one-time gains and costs, came to $1.48 per share.
That topped Wall Street expectations. The average estimate of analysts surveyed by Zacks Investment Research was for earnings of $1.36 per share.
The retailer posted revenue of $14.21 billion in the period, which missed Street forecasts. Analysts expected $14.41 billion, according to Zacks.
Revenue at stores opened at least a year rose 2 percent in the fourth quarter in its domestic business.
Shares rose 36 cents to $38.99 in late morning trading Tuesday.
Best Buy shares have climbed more than 45 percent in the last 12 months.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on BBY at http://www.zacks.com/ap/BBY