Best Buy Co Inc. Q4 Same-Store Sales Fell; Revenue Fell; Same-Store Online Sales Jumped 17.5%
Written by bnn.ca
Best Buy Co Inc. (NYSE: BBY) on Wednesday reported an unexpected drop in same-store sales for the holiday quarter, the latest example of an electronics retailer struggling with waning demand and fierce competition from online stores.
Best Buy's:
- sales at stores open for more than a year fell 0.7% in the fourth quarter. Analysts were expecting an increase of 0.5%, according to research firm Consensus Metrix,
- revenue fell 1% to US$13.48 billion in the quarter ended Jan. 28, missing analysts' estimate of US$13.62 billion, according to Thomson Reuters I/B/E/S,
- adjusted profit of US$1.95 per share beat estimates of US$1.67,
- net income increased 27% and its adjusted earnings beat Wall Street estimates and
- U.S. same-store online sales jumped 17.5%.
Best Buy blamed weak demand for tablets, gaming consoles, wearable devices and mobile phones and said it expects sales at its established stores to drop 1-2% in the current quarter. U.S. brick-and-mortar retailers are under pressure from slow economic growth and competition from the likes of Amazon (AMZN). A fast maturing wearable and mobile device markets has also contributed to waning demand..."We continue to believe that Best Buy is one of the brick-and-mortar 'leaders' in the push online," Moody's retail analyst Charlie O'Shea said.
Consumer Edge Research retail analyst David Schick believes Best Buy's results are reflective of the industry and not the company. "We think lackluster mobile, some product outages, and worse gaming (in a quarter that matters) are the forces at work -- not a sudden shift to a less relevant BBY," Schick said but, with fewer planned cost cuts and innovative new electronics on the horizon, analysts have voiced concerns that 2018 could be a tough year for Best Buy, which has relied on buybacks to drive earnings per share growth.
Best Buy on Wednesday accelerated its share buyback plan to US$3 billion over two years from US$1 billion over two, and also hiked its quarterly dividend.
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