U.S. electronics giant Best Buy Co. Inc. revealed better than expected sales and profit August 23 even though revenue from international sales declined when converted into U.S. dollars. The news sent shares of the company (NYSE:BBY) up about 19%.
Best Buy is the parent company to one of the largest retailers based in B.C. – Burnaby’s Best Buy Canada.
Although Best Buy does not break out Canadian revenue and profit from its international segment, which also includes Mexico, the vast majority of its international sales come from Canada.
In the quarter that ended July 30, overall Best Buy earnings rose to US$198 million, or 61 cents a share. That’s up from US$164 million, or 46 cents a share, in the same period a year ago.
Revenue crept up to US$8.533 billion from $8.528 billion in the same period a year ago. That beat analysts’ consensus estimate of US$8.392 billion.
Both domestic U.S. revenue and international sales topped expectations.
The international segment, however had revenue of US$644 million, which was a decline of 1% from the same period a year ago. That decline was driven by what the company called “approximately 510 basis points of negative foreign currency impact.”
On a constant currency basis, international revenue was up 4.1%, driven by growth in both Canada and Mexico, according to the company.
The company’s international profit margin improved to 25.8%, compared with 23.4% a year ago.
The company noted that its “profit rate improvement was primarily driven by a higher year-over-year gross profit rate in Canada.”
Iranian immigrant to Vancouver, Hassan Khosrowshahi, founded Future Shop in 1982 and expanded it into a chain of more than 100 stores before selling it to Best Buy for $580 million in 2001.
(Image: Best Buy Co. Inc. shares soared about 19% on August 23 and scraped a new 52-week high)
Best Buy then kept that brand even as it started opening Best Buy-branded stores across Canada.
On March 28, 2015, the company consolidated the Future Shop and Best Buy stores and websites in Canada under the Best Buy brand.
This resulted in the permanent closure of 66 Future Shop stores, the conversion of 65 Future Shop stores to Best Buy stores and the elimination of the Future Shop website.
Best Buy Canada, which is run as a subsidiary and has its own management based in Burnaby, has more than 200 stores across Canada.
