Best Buy quarterly sales jump, but outlook weighs on shares
NEW YORK — Best Buy Co. saw the biggest quarterly sales growth at established stores in 15 years, helping push revenue and profit beyond Wall Street expectations.
Same-store sales, a key measure of a retailer’s health, jumped 6 per cent as shoppers bought products from home theatre components to gaming devices to mobile phones. Consumers also took advantage of expanded services.
Best Buy has shown resilience in the face of increasing online competition, improving its stores to allow shoppers to test new technology, investing in price matching and offering speedier delivery options. And it’s even joined with Amazon to let the company sell voice-controlled TVs at its stores.
The results extend a string of strong numbers from old-guard retailers like Walmart, Target and Home Depot, which have been helped by a stronger economy and their own efforts to improve the shopping experience.
But investors sent Best Buy shares down 7 per cent on a weaker-than-expected forecast for the current quarter.
Online sales growth also slowed, rising 10 per cent, compared with 12 per cent in the first quarter and nearly 18 per cent in the quarter before that. CEO Hubert Joly said that online sales for consumer electronics are established and thus growing more slowly.
While the chain is focusing on driving online revenue, it’s also working to build deeper relationships and increase total revenue from customers who are shopping both online and in stores. That means reducing the time a customer has to spend at the pickup counter.
It’s also been expanding its tech support services, including a free service in about 430 markets where salespeople visit customers at home to make recommendations on TVs, setup and more. It also launched a service that costs $199.99 a year that offers unlimited Geek Squad technical support and many other services.
Best Buy is also pushing more into the health field, acquiring a company this month called GreatCall that provides emergency response devices for the aging.
The Richfield, Minnesota-based company’s profit jumped nearly 17 per cent to $244 million, or 86 cents per share, as revenue rose 5 per cent to $9.38 billion.
Earnings before adjustments for restructuring costs were 91 cents per share, topping Wall Street expectations for 83 cents per share. Revenue also beat Wall Street forecasts.
The consumer electronics retailer also raised its full-year guidance to a range of $4.95 to $5.10 per share, up from $4.80 to $5.00 per share. Analysts expect profit of $5.01 per share.
But the third-quarter outlook fell short. It calls for profit of 79 cents to 84 cents per share on revenue of $9.4 billion to $9.5 billion. Analysts polled by FactSet expect profit of 94 cents per share on revenue of $9.49 billion, on average.
Best Buy shares had risen 19 per cent since the beginning of the year, while the Standard & Poor’s 500 index has climbed slightly more than 8 per cent. But its shares fell $5.891 to $75.75 in Tuesday trading.
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 https://www.zacks.com/ap/BBY