Best Buy tops Street but Q3 forecast disappoints

Press enter to search
Close search
Open Menu

Best Buy tops Street but Q3 forecast disappoints

By Deena M. Amato-McCoy - 08/28/2018
Despite beating second quarter profit and revenue expectations, Best Buy anticipates slower growth going forward.

For the quarter ended Aug. 4, net income increased to $244 million, or 86 cents a share, from $209 million, or 67 cents a share, in the same period a year ago. Excluding items, adjusted earnings per share increased 32% to 91 cents. This was above the analyst estimates of 83 cents.

Revenue rose to $9.38 billion from $8.94 billion, beating analyst expectations of $9.25 billion. Similarly, same-store sales rose 6.2%, which exceeded expectations of a 4.2% increase.

“We are happy to report strong top- and bottom-line results for the second quarter that exceeded our expectations,” said Hubert Joly, Best Buy’s chairman and CEO.

“Our comparable sales growth was helped by the favorable environment in which we operate and driven by how customers are responding to the unique and elevated experience we are building,” he added. “We are particularly encouraged with the continued progress of our Net Promoter Scores and our continued market share gains.”

Looking ahead to the third quarter, however, Best Buy is hedging its bets. The company expects adjusted EPS to range between 79 cents to 84 cents. The company also expects revenue of $9.4 billion to $9.5 billion, and enterprise comparable sales growth of 2.5% to 3.5%

Best Buy has higher expectations for the full year however, predicting comparable sales growth of 3.5% to 4.5% versus its original guidance of flat to growth of 2.0%. Best Buy also expects revenue will be $42.3 billion to $42.7 billion, and non-GAAP diluted EPS will range between $4.95 to $5.10, above its original guidance of $4.80 to $5.00.

“We are expecting a non-GAAP operating income rate decline in the third quarter followed by an increase in the fourth quarter to result in our expectation for an approximately flat rate to last year on a full-year basis,” Joly said. “Similar to the past several years, we remain focused on managing the business for long-term success rather than ensuring a straight-line quarterly operating income rate performance.”

RELATED TOPICS