Electronics retailer Best Buy Co. Inc. (BBY, Financial) reported better-than-expected second-quarter 2018 results before the opening bell on Aug. 29.
The Minnesota-based retailer posted adjusted EPS of 69 cents, beating estimates of 63 cents and increasing from 61 cents per share last year. Quarterly revenue of $8.94 billion surpassed expectations of $8.66 billion and grew 4.8% from the year-ago quarter.
The graph below illustrates the trend in the company’s revenue growth over the past decade.
Despite the beat, Best Buy shares fell around 6% to open at $58.17 on Tuesday. It closed at $62.47 on Monday.
Same-store sales swelled 5.4%, better than the expected 2.2% growth. Internationally, comps increased 4.7% due to growth in Canada and Mexico.
Chairman and CEO Hubert Joly attributed the company’s sales performance to strong consumer demand for its technology products.
“Against a backdrop of continued healthy consumer confidence, we believe broad-based product innovation is resonating with consumers and driving higher spend,” Joly said. “And, with our effective merchandising and marketing activities – combined with our expert advice and service available online, in-store and in-home – we are garnering an increasing share of those dollars.”
Like most retailers, Best Buy has been facing fierce competition from Amazon (AMZN, Financial). As a result, it has invested more in its online platform. During the second quarter, the company recorded e-commerce sales growth of 31.2% due to increased traffic and higher conversion rates.
Chief Financial Officer Corie Barry said due to “the anticipation of continued positive industry and consumer momentum,” the company raised its guidance for the year. Best Buy now expects sales growth of 4% for the year, up from the prior guidance of 2.5% growth. It also forecasts income growth between 4% and 9%, up from the previous estimate of between 3.5% and 8.5% growth.
Among the gurus invested in Best Buy, Jim Simons (Trades, Portfolio) has the largest holding. During the second quarter, he added to his position and now owns 1.16% of outstanding shares. A total of 12 gurus are shareholders.
Disclosure: I do not own any stocks mentioned.
