Best Buy same-store sales beat estimates, shares hit 3-year high
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The outside of a Best Buy store is seen in Westbury, New York, U.S., May 23, 2016. REUTERS/Shannon Stapleton
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By Gayathree Ganesan
(Reuters) - Best Buy Co Inc (NYSE: BBY), the No. 1 U.S. electronics retailer, reported a better-than-expected rise in quarterly profit and same-store sales on Thursday, helped by higher online revenue and strong demand for TVs, home theaters and wearable devices.
The retailer's forecast for full-year adjusted profit also beat analysts' expectations, sending its shares up 7.5 percent to $43.50 in early trading, their highest in three years.
The Richfield, Minnesota-based company said sales at established stores rose 1.8 percent in the third quarter ended Oct. 29, topping the 1 percent rise analysts on average had expected, according to research firm Consensus Metrix.
Online revenue jumped 24.1 percent to $881 million, accounting for 9.8 percent of total revenue, as traffic increased and customers spent more per purchase. Online sales accounted for 8 percent of revenue in the third quarter of 2015.
Consumer electronics revenue rose 4.9 percent on a comparable store basis, while sales in the part of the business that sells laptops, tablets and mobile phones ticked up 1.6 percent, compared with a decline of 0.9 percent last year.
Sales of appliances, which have also been helped by the housing market recovery, rose 3 percent on a comparable store basis. However, that paled against last year's increase of 16.4 percent, partly due to Samsung Electronics Co Ltd's <005930.KS> recall of 2.8 million washing machines, analysts said.
Best Buy said the unavailability of some products due to recalls could drag down sales in the holiday shopping quarter by $200 million, to $13.4 billion-$13.6 billion.
Analysts on average had expected Best Buy to report sales of $13.7 billion in the current quarter, which includes January, according to Thomson Reuters I/B/E/S.
Best Buy also sold Samsung's Galaxy Note 7 phones, whose production ended after they showed a tendency to catch fire.
"The Samsung issues will be somewhat of a drag on Q4," Moody's analyst Charles O'Shea said.
"However ... Best Buy will be able to overcome these and have a strong holiday and overall fourth quarter, driven in large part by continuing online acceleration."
Best Buy said it expects same-stores sales to rise or fall by 1 percent in the current quarter.
The company's net income rose 55 percent to $194 million, or 61 cents per share.
Excluding certain items, Best Buy earned 62 cents per share, beating analysts' average estimate of 47 cents, according to Thomson Reuters I/B/E/S. Net sales rose 1.4 percent to $8.95 billion, beating the average estimate of $8.85 billion.
Up to Wednesday's close, Best Buy's stock had risen about 35 percent this year.
(Reporting by Gayathree Ganesan in Bengaluru; Additional reporting by Siddharth Cavale; Editing by Martina D'Couto and Sai Sachin Ravikumar)
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