Best Buy misses on Q2 sales, beats on earnings, tariffs loom

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Best Buy misses on Q2 sales, beats on earnings, tariffs loom

By Dan Berthiaume - 08/30/2019
Best Buy had mixed results in the second quarter of fiscal 2020 and is preparing for the impact of upcoming Chinese tariffs.

Quarterly enterprise revenue equaled $9.54 billion, up 2% from $9.37 billion but short of analyst estimates of $9.6 billion. Same-store sales rose 1.6%, missing predictions of 2.1% growth. Adjusted earnings per share (EPS) beat the Street at $1.08 per share, compared to estimates of $0.99 per share.

In providing guidance for the third quarter and full fiscal year 2020, Best Buy CEO Corie Barry said the consumer electronics retailer tried to factor in the negative effect of a 15% tariff on Chinese imports starting Sept. 1 will have on core products including TVs, smartwatches and headphones. Another 15% tariff on Chinese imports scheduled to take effect Dec. 15 will impact products the retailer sells including computing, mobile phones and gaming consoles.

For the full year, Best Buy is forecasting enterprise revenue of $43.1 billion to $43.6 billion, which compares to prior guidance of $42.9 billion to $43.9 billion, and enterprise same-sales growth of 0.7% to 1.7%, which compares to prior guidance of 0.5% to 2.5%, and non-GAAP diluted EPS of $5.60 to $5.75, which compares to prior guidance of $5.45 to $5.65.

For the third quarter, Best Buy is forecasting enterprise revenue of $9.65 billion to $9.75 billion, enterprise same-store sales growth of 0.5% to 1.5%, and non-GAAP diluted EPS of $1.00 to $1.05.

“There is a bit of art and a bit of science to estimating this, and we don’t exactly have a precedent for the quantity of moving pieces that we have in place right now,” Corie said during an analyst call. “There’s a few things we are trying to take into account here.”

Uncertain tariff factors Corie cited include which goods are on the Trump Administration’s list, when they will be implemented, and at what rates.

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