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SMF Notes BBY Best Buy misses by $0.11, reports revs in-line; reduces/suspends earnings outlook; suspends share repurchases after buying back 6.3 mln shares in Q2 (18.16 )
Reports Q2 (Jul) earnings of $0.20 per share, excluding non-recurring items, $0.11 worse than the Capital IQ Consensus Estimate of $0.31; revenues fell 2.8% year/year to $10.55 bln vs the $10.62 bln consensus. Domestic comp store sales decline of 1.6% improved compared to fiscal first quarter decline of 3.7%. Domestic estimated market share maintained year-over-year. U.S. big box square footage reduced by 4% year-over-year; Domestic revenue per square foot up 1% year-over-year. Similar to the first quarter of fiscal 2013, International segment year- over-year operating income decline driven primarily by lower revenue in China, Canada and increased competitive conditions in Europe. Domestic segment total Services category revenue increased ~6%. The co repurchased $122 million, or 6.3 million shares, of its common stock at an average price of $19.28 per share during the fiscal second quarter. The co has suspended its share repurchases for fiscal 2013 as it goes through the transition to a new CEO.
Due to lowered expectations for industry wide sales and the uncertainty associated with several key product launches expected in the second half of fiscal 2013, the co has reduced its annual earnings expectations (previously $3.50-3.80, consensus: $3.61). In addition, the co has just announced a new CEO who will start in early September. Given these factors, the co does not intend to further provide or update earnings guidance for fiscal 2013. The co will continue to provide forward looking commentary on business trends. The co continues to expect to achieve its domestic market share goals for the fiscal year and expects to generate free cash flow in the range of $1.25 billion to $1.5 billion for fiscal 2013.