Best Buy Shares Bleed Despite Earnings Beat Analysts’ Expectations

Best Buy Shares Bleed Despite Earnings Beat Analysts’ Expectations

Shares of Best Buy plummeted more than 16% early Tuesday despite the company’s fiscal third-quarter earnings surpassing analysts’ estimates. 

In the quarter ended Oct 30, the company reported net revenue of $11.91 billion, surpassing the Wall Street expectation of $11.58 billion. 

Domestic revenue during the quarter came in at $10.99 billion, up 1.2% from $10.85 million reported in the last year in the same quarter. 

Domestic online revenue attracted $3.44 billion, down 10.1% on a comparable basis, and as a percentage of total Domestic revenue, online revenue fell almost 31.3% versus 35.2% last year.

Same-store sales growth were reported to be 2% in the U.S., compared to 22.6% growth in the year-ago period. That beat the company’s own estimation of same-store sales being flat to down 3% in the quarter.

“More people continue to sustainably work, entertain, cook and connect at home, and while customers are returning to stores, digital sales were still more than double pre-pandemic levels, and phone, chat and in-home sales continued to grow,” said Corie Barry, Best Buy CEO. 

“During the third quarter, we reached our fastest small-package online shipping times ever as our same-day delivery was up 400%, and we nearly doubled the percent of products delivered within one day compared to last year.”

Earnings per share stood at $2.08 in the reporting quarter, while the analysts were expecting $1.91. 

Following the declaration, Best Buy stock fell more than 16% during the pre-market trading session on November 25. The social engagement for the stock amongst the users of Twitter and Reddit on the dashboard of Encome will be printed as the day proceeds. 

The social engagement for the stock, on Monday, amongst the users of Twitter and Reddit rose approximately 262% in anticipation of the earnings report. 

The stock opened its intraday at $116 apiece, down $22 per share or 15.94% from the previous day’s close of $138 apiece.

Best Buy stock activity

Net income increased to $499 million, or $2.00 per share corresponding to $391 million, or $1.48 per share in the same quarter in the previous quarter.

However, analysts are worried that Best Buy may see sales weaken as consumers are shifting their priorities to other areas like travel and entertainment. This would lead to the retailer offering more promotions on laptops, smartphones and others despite supply chain-related costs remaining high.

The company raised its forecast, it sees its fourth-quarter revenue to come in the range of $16.4 -$16.9 billion. For the full year, it anticipates revenue to attract $51.8-$52.3 billion against the prior outlook of $51 billion to $52 billion. It sees same-store sales growth of 10.5% to 11.5% for the year.

“We are looking forward to a strong holiday season and believe we are extremely well-positioned with both the tech customers want and fast and convenient ways to get it,” said Matt Bilunas, Best Buy CFO. “We are committed to driving initiatives that will deliver future growth and our Q4 outlook reflects continued investments in our new membership program, technology, advertising and our health strategy.”