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Best Buy Co., Inc. (BBY): What to Do, What to Do, What to Do..

Who were the people that bid up shares of Best Buy Co., Inc. (NYSE:BBY) to a fresh 52-week high yesterday?

The troubled consumer electronics retailer posted horrendous fiscal first-quarter results this morning. Best Buy won’t tell you that. In fact, the press release’s headline — Best Buy Reports Better-Than-Expected First Quarter Results — is one of the many inside jokes that investors will see as they explore the numbers.

Best Buy Co., Inc. (NYSE:BBY)

It’s true that the adjusted earnings of $0.32 a share did beat Wall Street estimates of $0.25 a share, but are we celebrating a 58% plunge in adjusted net income?

More importantly, how is a nearly 10% plunge in revenue better than the 8% drop that analysts were projecting?

Revenue slipped as the company closed down dozens of stores in the middle of last year and domestic and international comps declined 1.1% and 2.8%, respectively.

If you’re ready for some laughs, follow me down the rabbit hole.

Best Buy Co., Inc. (NYSE:BBY) argues that stateside comps would’ve been flat if the Super Bowl hadn’t shifted into last year’s fiscal fourth quarter. The company’s decision to reduce sales in certain non-core businesses also kept comps down.

Let’s tackle the Super Bowl first. The “pre-Super Bowl” sales phenomenon apparently took place during the holiday quarter, but the benefit during that quarter was just 35 basis points — or 0.35%. The balance, then, would seemingly come from the company’s decision to reduce sales, but wasn’t it really the customer’s decision to reduce purchases?

We can’t argue that Best Buy Co., Inc. (NYSE:BBY) was moving toward higher-margin products in its shift away from non-core businesses, because that certainly didn’t happen. Gross profit margins shrank from 25.3% during last year’s first quarter to 23.4% this time around, and that’s with legal settlement proceeds padding that number this time around.

And — once again — let’s clarify that when Best Buy Co., Inc. (NYSE:BBY) tweaks conditions to arrive at “flat” comps, it doesn’t mean that the average store would be selling as much as it did a year earlier. Best Buy adds online sales to its comps mix, and that 7% increase — or 16% on a comparable basis given one fewer week this time around — is divided into what is now fewer stores after the 49 springtime closures last year.

So why did Best Buy hit fresh highs this week when it’s a shell of the company that it was a week ago?