Best Buy Co Inc (NYSE: BBY) is up more than 10% on Tuesday after the consumer electronics retailer reported profit for its third financial quarter that topped the Street estimates by a significant margin.
Investors are also cheering improvement on the inventory front that saw executives raise their guidance for the full year as well.
Reacting to the earnings print on CNBC’s “Squawk on the Street”, famed investor Jim Cramer sounded bullish on the stock as he said:
I think people chronically underestimated Best Buy. Corie Barry is a remarkable CEO who managed, unlikely everybody else, to have a supply chain in place before the supply chain problem started. She figured it out.
Best Buy also resumed share buybacks in November. On the earnings call, CFO Matt Bilunas said the retailer will spend roughly $1.0 billion on stock repurchase this year and is committed to being a “premium dividend payer”.
Best Buy ended the quarter with merchandise inventories “down” 14.7% versus a year ago – that’s unlike other retailers that are still wrestling with excess. Cramer added:
I had Corie Barry on and she said, look, we’re not going to get a lot of inventory. We know what sells well; we know what’s not selling well. We know gaming cycle is near an end. We know that PCs are in blood. Let’s sell other things.
Shannon Saccocia of SVB Private also applauded Best Buy today for a “great job” in handling inventory this year.
Promotional activity contributed to a 150-bps hit to gross margin. For the financial 2023, Best Buy now forecasts a 10% hit to same-store sales versus 11% it had guided for earlier.
Best Buy was also in retail news a couple months ago when it partnered with the crypto wallet provider – Ledger (find out more).
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