Best Buy Shares Soar Following Q2 Report
Best Buy’s stock skyrocketed 19 percent in Tuesday morning trading, the highest single-day percentage increase recorded by it in a decade. The jump occurred after the company noted strong gains in earnings, online sales and same-store sales during its second quarter report.
For the three-month period ending July 30, the electronics retailer had previously estimated its same-store sales—or locations open a year or more—would be flat. Instead, its same-store sales grew 0.8 percent.
“This is on top of comparable sales growth of 3.8 percent last year,” Best Buy CEO Hubert Joly said in a statement. “Our teams delivered a strong second quarter with better-than-expected revenue and profitability in both our Domestic and International businesses.”
The retailer’s $8.5 billion in revenue slightly edged out the previous year’s quarter, while its year-over-year-profits climbed by more than 20 percent from $164 million to $198 million. Best Buy’s 57 cents in earnings per share for the second quarter also handedly beat Wall Street expectations of 43 cents, as well as the company’s own guidance of 38 to 42 cents.
Sales of home theater products, TVs, major appliances, computing equipment, and digital health products, such as wearables, helped lift Best Buy’s sales declines in smartphones and video games.
“We saw continued positive momentum in our online sales,” Joly said, “delivering a second straight quarter of nearly 24 percent growth.”
Best Buy’s results—particularly in same-store sales and online growth—starkly differ from the second quarter report released by Target last week. Despite having a smaller online base than Best Buy and more room to grow, Target’s online sales growth hit only half of the pace it set last year. Furthermore, same-store sales at Target dropped by 1.1 percent in the same three-month period at Best Buy.
For the third quarter, Best Buy expects its same-store sales growth will continue with a 1 percent year-over-year increase. In addition, the company raised its earnings outlook for the year from flat to growth in the low-single digits.