Best Buy (BBY) Revenue Exceeds Profit for Q3 2022

Customers wait outside a Best Buy store in downtown Toronto, Ontario on November 23, 2020 to pick up their online orders.

Jeff Robbins | AFP | Getty Images

Best Buy’s fiscal third-quarter profit beat forecasts on Tuesday, but stocks fell as investors worried about rising shipping costs and weaker demand for consumer electronics.

The stock closed 12.31% lower at $ 121.01.

Here’s what the company did in the third fiscal quarter ended October 30, compared to what Wall Street expected, according to a Refinitiv survey of analysts:

  • Earnings per share: $ 2.08 (adjusted) vs. $ 1.91 expected.
  • Revenue: $ 11.91 billion vs. $ 11.58 billion expected

The consumer electronics retailer experienced a surge in sales during the pandemic as Americans modernized technology in their home offices, bought new appliances for their kitchens, and invested in home theaters. In the third quarter, Best Buy said these trends will continue as home theaters and home appliances increased sales as well as smartphones.

Net income rose to $ 499 million, or $ 2 per share, from $ 391 million, or $ 1.48 per share, a year earlier.

Excluding items, it earned $ 2.08 per share, higher than the $ 1.91 per share expected by analysts polled by Refinitiv.

Net sales rose to $ 11.91 billion from $ 11.85 billion a year earlier, surpassing the $ 11.58 billion estimate.

Similar store sales in the United States were up 2% quarter-on-quarter, compared with 22.6% growth a year earlier. This exceeded the company’s own forecast that similar store sales would remain unchanged at 3% qoq.

However, analysts are concerned that Best Buy sales may decline as consumers shift their spending to other areas such as travel and entertainment. This could force the seller to offer more deals for laptops, smartphones and other products, even if supply chain costs remain high.

The company raised its full-year forecast slightly to reflect third-quarter earnings, saying it now expects revenues of $ 51.8 billion to $ 52.3 billion, up from a previous forecast of $ 51 billion to $ 52 billion. Sales in the same stores are expected to increase over the year from 10.5% to 11.5%.

Revenue is expected to be between $ 16.4 billion and $ 16.9 billion in the fourth quarter, with sales in the same stores ranging from 1% growth to 2% decline.

Big bet on the membership program

CEO Corey Barry said the company has good prospects for the future. In a press release, she said Best Buy had achieved the fastest delivery times for small packages, and that same-day delivery was up 400% in the third quarter from a year ago. In addition, she noted that digital sales more than doubled pre-pandemic levels, even as shoppers returned to stores.

CFO Matt Bilunas said the retailer is also promoting new ways to make money, including a membership program, advertising and healthcare expansion.

“We look forward to having a great holiday and believe we are very well positioned, both in terms of technical customer needs and quick and convenient ways to get them,” he said in a press release.

Bilunas said promotion levels were higher in the third quarter than a year ago, but lower than the same period in 2019. He did not offer forecasts for next year, but said Best Buy expects more significant discounts to be offered in the coming quarters. …

“Obviously, as inventory becomes more free, you can imagine the ad campaign starting to expand in categories, one at a time, as we move on to next year,” he said in the company’s income statement. …

Barry said that instead of competing with competitors on price alone, the company can avoid discounts and stand out by offering fast online shopping delivery and superior customer service. One way to do this is by using Totaltech’s new membership program, which includes perks such as tech support and costs $ 199.99 per year.

“The goal is to create an experience that makes it impossible for members to buy their technology from anyone else, leading to an increase in consumer electronics spending at Best Buy,” she said.

Best Buy is already an Authorized Service Provider for According to Barry, Apple allows employees to troubleshoot technical problems and repair mobile phones. The company recently added Samsung Certified Repair, which will further drive store traffic, she said.

Best Buy shares are up 20% this year as of the end of Tuesday. The market value of the company at the close on Tuesday is $ 29.76 billion.

Read the company’s press release here.

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