Customers are waiting outside a Best Buy store in downtown Toronto, Ontario on November 23, 2020 to pick up their orders online.
Geoff Robbins | AFP | Getty pictures
Best Buy’s fiscal result for the third quarter beat estimates on Tuesday, but shares fell as investors worried about rising shipping costs and weaker demand for consumer electronics.
Shares fell more than 1[ads1]1% in pre-market trading.
Here’s what the company did for the third quarter that ended Oct. 30 compared to what Wall Street expected, based on a survey among analysts from Refinitiv:
- Earnings per share: $ 2.08 adjusted vs. $ 1.91 expected
- Revenue: $ 11.91 billion against the expected $ 11.58 billion
The consumer electronics retailer has seen sales jump during the pandemic, as Americans upgraded the technology in their home offices, bought new appliances for the kitchen and invested in home theater. During the third quarter, Best Buy said they saw these trends continue as home theaters and appliances increased sales, along with smartphones.
Net income rose to $ 499 million, or $ 2.00 per share, from $ 391 million, or $ 1.48 per share, a year earlier.
Excluding commodities, it earned $ 2.08 per share, higher than the $ 1.91 per share expected by analysts researched by Refinitiv.
Net sales rose to $ 11.91 billion from $ 11.85 billion the year before, surpassing estimates of $ 11.58 billion.
Sales in the same store during the quarter increased by 2% in the US, on top of 22.6% growth in the same period last year. It exceeded the company’s own forecast that sales in the same store were flat to down 3% in the quarter.
However, analysts are concerned that Best Buy may see sales weaken as consumers move spending to other areas such as travel and entertainment. This may force the retailer to offer more promotions on laptops, smartphones and more – even if the costs associated with the supply chain are still high.
The company raised its forecast slightly for the year to reflect third-quarter gains, saying it now expects revenues of between $ 51.8 billion to $ 52.3 billion compared to previous forecasts of $ 51 to 52 billion. It expects sales in the same store of 10.5% to 11.5% for the year.
For the fourth quarter, it says it expects revenue of $ 16.4 billion to $ 16.9 billion, and sales in the same store in the area of 1% growth to 2% decline.
CEO Corie Barry said the company is well positioned for the future. She said in a press release that Best Buy reached its fastest delivery times ever for small packages and that same-day delivery rose 400% in the third quarter compared to last year. In addition, she noted, digital sales were more than double pre-pandemic levels, even when customers returned to stores.
CFO Matt Bilunas said the retailer is also pushing for new ways to make money, including membership programs, advertising and expansion into healthcare.
“We are looking forward to a strong holiday and believe we are extremely well positioned with both the technology customers’ wishes and quick and practical ways to get it,” he said in a press release.
As of Monday, the Best Buy shares are up 38% this year. Shares reached a 52-week high of $ 141.97 on Monday and closed at $ 138.00, up 1.37%. The company’s market value is $ 33.94 billion.
Read the company’s press release here.