Best Buy ups full-year outlook on heels of strong Q2

Best Buy reported better-than-expected profit and sales for its second quarter amid growth for smartphones, connected home and wearable devices. But the retailer added a slight caveat going forward.



Best Buy's same-store sales rose 5.2% in the quarter ended July 29, easily topping analysts’ estimates for a 2.1% gain. But on the chain's quarterly call with analysts, CEO Hubert Joly said that he did not think that the mid-single-digit rise in comparable sales would continue, and that it did not represent a "new normal."



Still, there was no disputing the consumer electronic giant turned in a strong performance for the quarter. Net income increased to $209 million, or 67 cents per share, from $198 million, or 61 cents a share, one year ago. Excluding one-time charges, the company earned 69 cents per share, compared with a forecast profit of 63 cents per share.



Revenue increased 4.9% to $8.94 billion, versus an estimate of $8.66 billion. Online same-store sales jumped about 31%, helped by faster shipping and improvements to its checkout and search functions. In comments, Neil Saunders, managing director, GlobalData Retail, said that the key reason Best Buy is enjoying such strong growth online is a "joined-up proposition that allows customers to quickly and easily order products online and collect them in stores."



"From our customer data, it is also clear that there are large groups of customers who feel more confident buying online from Best Buy than other e-commerce only merchants, mainly because Best Buy has stores where they can seek advice, resolve problems, and return items," Saunders said. (For more, click here.)



In a statement, Best Buy CEO Joly emphasized the company's strong top and bottom line growth in the quarter.



"Against a backdrop of continued healthy consumer confidence, we believe broad-based product innovation is resonating with consumers and driving higher spend," he said. "And, with our effective merchandising and marketing activities, combined with our expert advice and service available online, in-store and in-home — we are garnering an increasing share of those dollars."



Best Buy raised its guidance for the full year. It now expects sales for the full year to increase 4%, compared to a prior forecast of 2.5%. It estimates income to rise 4% to 9% compared to a previous estimate for 3.5% to 8.5%.



"This updated guidance reflects stronger-than-originally-expected second half revenue performance with profitability roughly in line with our previous expectations," said Best Buy CFO Corie Barry. "The increased topline expectations are being driven by the anticipation of continued positive industry and consumer momentum, coupled with the impact of product launches.