Best Buy Spent Big for Black Friday, Missed Estimates (BBY)
Electronics retailer Best Buy Co. Inc. (NYSE: BBY) tried something different this year to boost its Black Friday sales. The store spent much more on promoting its goods and opened its stores at midnight rather than waiting until 5 a.m.…
Electronics retailer Best Buy Co. Inc. (NYSE: BBY) tried something different this year to boost its Black Friday sales. The store spent much more on promoting its goods and opened its stores at midnight rather than waiting until 5 a.m. as in years past.
Though the promotions were successful in attracting customers and sales, they hit the company’s bottom line in its quarterly earnings which came out this morning. Adjusted EPS came in at $0.47 compared with estimates of $0.51, and revenue totaled $12.1 billion, just shy of estimates of $12.14 billion for the quarter. Comparable store sales in the quarter fell by -5% in the US.
An analyst from JPMorgan predicted a margin decrease of 0.25%, which turned out to be optimistic. The company’s gross margin fell -1%, a drop the company explained this way:
The primary factors influencing the rate decline included increased promotional activity to drive increased traffic and sales in key areas like mobile computing, television and movies, a heavier mix of sales in promotional items with lower margins and higher proportion of sales of service products which include deferred revenue.
Best Buy shares are off -8.8% in the pre-market, at $25.60 in a 52-week range of $21.79-$42.57.
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
