Best Buy shares tumbled Tuesday morning despite the electronics retailer reporting second-quarter earnings and sales that topped analysts’ expectations.
The company also raised its full-year profit outlook, building on its strong performance during the first six months of the year.
Still, the retailer’s stock was falling more than 6 percent in premarket trading on the news, as Best Buy gave an outlook for the third quarter that came in shy of Wall Street estimates.
Here’s what Best Buy reported for the quarter ended Aug. 4 compared with what analysts were expecting, according to a survey by Thomson Reuters:
* Earnings per share: 91 cents, adjusted, vs. 83 cents expected
* Revenue: $9.38 billion vs. $9.28 billion expected
* Same-store sales (domestic): up 6 percent vs. an increase of 3.7 percent expected
Net income was $244 million, or 86 cents per share, compared with $209 million, or 67 cents, a year ago. Excluding one-time items, Best Buy earned 91 cents, 8 cents ahead of analysts’ forecast.
Revenue climbed to $9.38 billion, again ahead of the $9.28 billion expected by analysts.
Sales at Best Buy stores open for at least 12 months were up 6.2 percent overall. That included domestic same-store sales growth of 6 percent, and international same-store sales growth of 10.1 percent.
CEO Hubert Joly said the sales growth “was helped by the favorable environment in which we operate and driven by how customers are responding to the unique and elevated experience we are building.”
The electronics retailer has benefited, like its peers within the industry, from a healthier economy across North America with stronger consumer confidence and low unemployment, putting more money back into shoppers’ pockets ahead of the 2018 holiday season.
Earlier this year, Best Buy announced it would be closing all 250 of its smaller-format mobile phone shops in order to focus more on its core business and service options within its existing, full-line locations. It’s since made several moves to do so. Just earlier this month, the retailer said it would be acquiring health services provider GreatCall Inc. for $800 million, in a bid to sell more products to an aging demographic in the U.S.
The purchase by Best Buy will help “counterbalance the pressure on both sales growth and margins of electronics products,” GlobalData Retail Managing Director Neil Saunders said.
Best Buy is also now working with Amazon to sell smart TVs, CNBC reported in April. The two companies have long been considered rivals in the business. But Best Buy has managed to hold on to market share as it locks in new sources of revenue that aren’t so dependent on product sales, including building its Geek Squad and in-home advisor network and expanding outside of the U.S.
Best Buy shares are up about 33 percent over the past 12 months, bringing the company’s market cap to about $22.8 billion.
This is a developing story. Please check back for updates.