Best Buy (BBY) in Q3 2022

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

Geoff Robbins | AFP | beautiful pictures

Best buyThird-quarter fiscal third-quarter earnings beat estimates on Tuesday, but shares fell as investors worried about rising shipping costs and weaker demand for consumer electronics.

Shares closed for the day down 12.31% to $121.01.

Here’s what the company did for the third quarter ending October 30 compared to what Wall Street expected, based on a survey of analysts by Refinitiv:

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

The consumer electronics retailer has seen sales skyrocket during the pandemic, as Americans upgrade the technology in their home offices, buy new appliances for their kitchens and invest into the home theater. During the third quarter, Best Buy said it saw those trends continue as home cinemas and home 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, well above the $1.91 per share expected by analysts surveyed by Refinitiv.

Net revenue rose to $11.91 billion from $11.85 billion a year earlier, beating estimates of $11.58 billion.

Same-store sales in the quarter rose 2% in the US, higher than the 22.6% growth in the same period last year. This exceeded the company’s own forecast for same-store sales of a 3% drop for the quarter.

However, analysts worry that Best Buy could weaken sales as consumers shift spending to other areas such as travel and entertainment. That could force the retailer to offer more deals on laptops, smartphones and more – even if the costs associated with the supply chain remain high.

The company, which raised its forecast for the year slightly to reflect third-quarter profit, said it now expects revenue of $51.8 billion to $52.3 billion, compared with its previous forecast of $51.8 billion. $51 billion to $52 billion. It projects same-store sales growth of 10.5% to 11.5% for the year.

For the fourth quarter, it said it expects sales of $16.4 billion to $16.9 billion and same-store sales to grow between 1% and 2%.

Big bet on membership program

CEO Corie Barry said the company is well positioned for the future. She said in a press release that Best Buy had the fastest shipping times ever for small packages, and that same-day deliveries jumped 400% in the third quarter from last year. . Plus, she noted, digital sales are more than double pre-pandemic levels, even as customers return to stores.

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

“We are looking forward to a strong holiday season and believe we are extremely well positioned for both the needs of our technology customers and the fast and efficient ways,” he said in a press release. convenient”.

Bilunas said sales in the third quarter were higher than a year ago, but lower than in the same period of 2019. He did not provide an outlook for next year, but said Best Buy expected to have to cut prices. further in the coming quarters. .

“Obviously, as inventory becomes more free, you can imagine that advertising will start to increase in categories every once in a while as we head into next year,” he said on the earnings call. of the company.

Instead of just competing with rivals on price, Barry said on the earnings call that the company can lower prices and stand out by providing fast delivery of online purchases and customer service. high-class. One way they do that is through their new membership program, Totaltech, which includes perks like tech support and costs $199.99 per year.

“The goal is to create an experience members can’t imagine buying their technology from anyone else, driving a larger share of consumer electronics spending to Best Buy,” she said. .

Best Buy is already an authorized service provider for AppleAllowing employees to troubleshoot technology and repair cell phones, says Barry. It was recently added Samsung The repair is certified, she says, which will be another store traffic booster.

As of late Tuesday, Best Buy’s stock was up 20% this year. The company’s market value as of the end of Tuesday was $29.76 billion.

Read the company’s press release here. Best Buy (BBY) in Q3 2022

Emma James

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