Best Buy Offers Disappointing Holiday Quarter Outlook

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Best Buy Co. Inc. (NYSE: BBY) reported its fiscal third-quarter financial results before the markets opened on Thursday. The retailer said that it had $0.78 in earnings per share (EPS) and $9.32 billion in revenue. That compares with consensus estimates from Thomson Reuters of $0.78 in EPS on revenue of $9.36 billion. In the same period of last year, the company posted EPS of $0.60 and $8.95 billion in revenue.

During this quarter, domestic revenue increased 3.6% to $8.5 billion year over year, driven by comparable sales growth of 4.5%.

International revenue increased 10.1% to $829 million, driven by approximately 530 basis points of positive foreign currency impact, and comparable sales growth of 3.8% due to growth in both Canada and Mexico.

In terms of the outlook for the fiscal fourth quarter, management expects to see EPS in the range of $1.89 to $1.99 and revenues between $14.2 billion and $14.5 billion. Consensus estimates call for $2.03 in EPS and $14.35 billion in revenue for the quarter.

On the books, Best Buy’s cash, cash equivalents and short-term investments totaled $3.34 billion at the end of the quarter, up from $3.12 billion at the end of the previous fiscal year.

Hubert Joly, Best Buy’s board chair and chief executive, said:

In the third quarter, we delivered strong top and bottom line results with 4.4% comparable sales growth and 30% EPS growth. Technology innovation is fueling demand and our strategy is resonating with our customers. We are also making significant progress against our Best Buy 2020 strategy and are excited about the opportunities for long-term value creation. And while we are investing in key initiatives and capabilities, we are also able to generate significant returns for our shareholders through the growth of our EPS and our capital allocation strategy.

Shares of Best Buy closed Wednesday at $57.30, with a consensus analyst price target of $59.82 and a 52-week range of $41.67 to $63.32. Following the announcement, the stock was down about 4% at $55.10 in early trading indications Thursday.