Best Buy Says 3Q Sales Were Disappointing
NEW YORK (AP) — Best Buy shares plunged Thursday after reporting disappointing quarterly sales and a cautious outlook for the key holiday shopping season as it faces price pressures and tougher competition from online stores.
The electronics retailer said it expects "near flat" revenue in the fourth quarter — which includes key holiday shopping.
Its stock tumbled 5 percent in morning trading.
The Richfield, Minnesota-based company reported that its fiscal third-quarter profit rose 16.8 percent to $125 million, or 36 cents per share. Earnings, adjusted for one-time gains and costs, came to 41 cents per share, surpassing Wall Street expectations. The average estimate of 14 analysts surveyed by Zacks Investment Research was for earnings of 35 cents per share.
But the company reported a 2.4 percent drop in revenue to $8.82 billion, which fell short of Wall Street forecasts. Ten analysts surveyed by Zacks expected $8.84 billion.
The company also reported disappointing same-store-sales growth of 0.5 percent. Analysts surveyed by FactSet expected a 1.2 percent increase in that closely-watched shopping metric.
Best Buy said growth in computing and appliance sales was offset by weak tablet, mobile phone and digital imaging device sales. Also, the company saw a drop in service revenue. International revenue plunged on a mix of smaller operations in Canada and a stronger U.S. dollar.
Despite the morning rout in the market, several analysts said the results are positive overall for the company, as it deals with a tough retail environment and continues to adapt.
Stifel analyst David A. Schick, in a note to investors, called the reaction "a little overdone" and said the guidance includes investments in growth initiatives.
Best Buy Co. shares dropped $1.58, or 5 percent, to $29.75 in morning trading. Its shares have decreased 20 percent since the beginning of the year, while the Standard & Poor's 500 index has risen 1 percent. The stock has dropped 10 percent in the last 12 months.
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