In an “uneven” demand environment, Best Buy beat a Wall Street estimate on earnings, missed one on sales and noted its efforts to reconstitute operations to position itself for better market conditions.
Net earnings were $263 million, or $1.21 per diluted share, versus $277 million, or $1.22 per diluted share, in the year-past quarter, the company reported. Adjusted for one-time events, earnings per diluted share were $1.29 per diluted share versus $1.38 per diluted share in the year-earlier period.
An analyst consensus estimate published by Yahoo Finance called for earnings per adjusted diluted share of $1.18 and revenues of $9.9 billion.
Comparable stores sales fell 6.9% for the company, with domestic comps down 7.3% and international comps down 1.9%. Domestic online comp sales fell 9.3%.
Best Buy sales were $9.76 billion versus $10.59 billion in the year-before quarter. Domestic segment sales were $9 billion versus $9.8 billion in the year-previous period. In the quarter, the biggest drivers of the comp decline on a weighted basis were appliances, computing, home theater and mobile phones, Best Buy indicated, partially offset by growth in gaming.
Operating income was $354 million versus $365 million in the year-earlier quarter while adjusted operating income was $369 million versus $412 million.
In a conference call, Corie Barry, Best Buy CEO, pointed to gains in the company’s membership program, with participants who tend to generate higher sales than customers who have not enrolled. Barry indicating Best Buy expects it to generate an approximately 35 basis point year-over-year operating income rate expansion in the current annum. Membership is helping to boost operations, as is a new app feature, Best Buy Drops, which gives consumers access to new and special product rollouts with digital sales associates accessible by phone, chat and the company’s virtual store. The initiatives also have helped introduce new tech and unique items as well as new product categories that Best Buy has added, including Beauty and Wellness. The company has been right-sizing store space, particularly as regards gaming, to accommodate growing product lines including Lovesac home furnishings, Barry noted.
In announcing the financial results, Barry said, “Today, we are reporting better-than-expected profitability on slightly softer-than-expected revenue for the third quarter. These results demonstrate our ongoing, strong operational execution as we navigate through the near-term sales pressure our industry has been experiencing for the past several quarters. In the more recent macro environment, consumer demand has been even more uneven and difficult to predict. Based on the sales trends in Q3 and so far in November, we believe it is prudent to lower our annual revenue outlook. The midpoint of our annual non-GAAP diluted EPS guidance is slightly higher than the midpoint of our original guidance as we entered the year. We are excited for the important holiday season and are prepared for a customer who is very deal-focused with promotions and deals for all budgets, new shopping experiences, an expanded product assortment, and fast and free fulfillment.”
