Best Buy's profit forecast points to robust holiday shopping demand
Reuters
Published Nov 26, 2019 08:33AM ET
(Reuters) - Best Buy Co Inc (N:BBY) signaled it expected a strong holiday shopping season by forecasting fourth-quarter profit above Wall Street estimates on Tuesday, sending the shares of the biggest U.S. tech retailer up 5% in premarket trading.
Target Corp (N:TGT) and Walmart Inc (N:WMT) have already predicted strong sales in the crucial period between Thanksgiving and Christmas that can account for as much as 40% of annual sales for U.S. retailers faced with a slowing economy.
U.S. consumer spending is slowing faster than economists had expected and the latest data has shown pockets of weakness, including in electrical appliances, which are Best Buy's main market.
Retail sales overall, however, rebounded in October and Chief Executive Officer Corie Barry said Best Buy was well prepared for the holidays with new products, deals and online ordering options.
"The typical Best Buy customer is at or slightly above median income, and this group is currently thriving," Wedbush analyst Michael Pachter said.
"At the same time, there are an increasing number of new consumer electronics products that have captured interest, including items in the mobile, smart home and wearables categories, all of which Best Buy excels at."
The retailer's focus on repair and tech support services as well as new financing and leasing options has also been helping it pull more shoppers into stores, especially at a time when the U.S. shopping landscape is being dominated by online retailers.
Best Buy said it expected fourth-quarter adjusted earnings of $2.65 to $2.75 per share, largely above Wall Street expectation of $2.65.
The company said same-store sales in the quarter was expected to rise between 0.5% and 3%, the mid-point of which is above estimates of a 1.4% increase.
In the third quarter, overall same-store sales rose 1.7%, beating analysts' average estimate of a 1.3% increase, according to IBES data from Refinitiv.
Revenue rose to 1.8% to $9.76 billion, beating expectations of $9.70 billion. Excluding one-time items, Best Buy earned $1.13 per share, ahead of analysts' estimates of $1.03 per share.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.