Best Buy Brushed Past Pandemic Disruptions. Earnings Beat Expectations and the Stock Is Rising.
Best Buy’s CEO said the company will benefit from structural changes to demand for technology.
Patrick T. Fallon /AFP via Getty Images
Best Buy delivered revenue and earnings growth ahead of analyst expectations in the latest quarter, managing to brush past Covid-19 pandemic disruptions.
Some customers had to pick up their goods from the curb or organize appointments to go inside stores.
Shares in the electronics retail giant rose more than 4% in U.S. premarket trading, after the stock was hovering 0.4% higher before earnings were released.
The company saw revenue of $11.8 billion in the 13 weeks to the end of July, which Best Buy (ticker: BBY) reports as its second quarter of fiscal year 2022. That beat analyst expectations of $11.6 billion, and marked growth from $9.9 billion in the comparable period in the year prior.
Operating income was $797 million, up from $568 million a year ago and ahead of Wall Street’s estimates of $628 million. Earnings per share (EPS) was $2.93, up from $1.67 a year ago and outpacing analyst expectations of $1.89.
“We are lapping an unusual quarter last year as our stores were limited to curbside service or in-store appointments for roughly half the quarter. When we compare to two years ago, our results are also very strong,” said Corie Barry, Best Buy’s chief executive.
The company said it expects comparable sales for the second half of this fiscal year to be in the range of flat to down 3% from last year—marking an upgrade from previous guidance of a high single-digit decline.
Best Buy’s CEO noted that the company has benefited from a “dramatic and structural increase in the need for technology” as consumers—and society at large—emerge from the depths of the Covid-19 pandemic.
“We now serve a much larger install base of consumer electronics with customers who have an elevated appetite to upgrade due to constant technology innovation and needs that reflect permanent life changes, like hybrid work and streaming entertainment content,” Barry added.
Analysts led by Bobby Griffin at investment bank Raymond James applauded the better-than-expected sales growth and earnings at the company, as well as a boost to EPS of around $0.50 from a lower-than-expected tax rate.
“This coincides with our thesis that Best Buy’s best-in-class fulfillment capabilities, increasingly important [consumer electronics] items, and well-positioned peer services/GreatCall initiatives should propel it to gain further market share over both the near-term and long-term,” the analysts said.
Griffin and the team at Raymond James highlighted, among other things, that the product categories at Best Buy with the strongest sales growth were home theater, appliances, computing, mobile phones, and services. They also noted that e-commerce revenues decreased 28% in the last quarter—after a 241% increase a year ago.
Write to Jack Denton at [email protected]
