Best Buy Co. Inc. BBY released its second-quarter results before the opening bell on Aug. 25. The consumer electronics retailer surpassed analysts' earnings and revenue projections thanks to strong digital performance.
By the numbers
The Richfield, Minnesota-based company posted adjusted earnings per share of $1.71, topping estimates of $1.08. Revenue surged 4% from the prior-year quarter to $9.91 billion. Analysts had anticipated revenue of $9.71 billion.
Comparable store sales climbed 5.8% in the reported quarter, which was more than the anticipated growth of 2.3%. The comps growth was attributed to strong sales of computing, tablets and appliances, which more than offset the decline in mobile phones and flat sales at home theatre.
"Products that help people work, learn, connect and cook at home, like computing, appliances and tablets, were the largest drivers of our sales growth for the quarter," CEO Corie Barry said. "Trends across most categories and services improved materially throughout Q2 as we opened our stores more broadly for shopping, especially categories like large appliances and home theater that benefit from more experiential shopping."
Domestic and international segments
Domestic revenue stood at $9.13 billion, down 3.5% year over year as comps growth of 5% was negated by the revenue loss from store closures in the previous year. Online revenue was $4.85 billion, which reflected 242.2% growth from the same period last year. Higher conversion rates and increased traffic drove the increase.
On the international front, revenue inched up 9.4% to $782 million, primarily due to comps growth of 15.1%, which was partly offset by unfavorable impact of foreign currency exchange rates. Gross profit of 23.8% was flat versus last year.
Going forward
Following better-than-expected quarterly results, the retailer has warned that the pace of sales growth could fall in the third quarter, although it expects to grow by this time next year. In addition, company said its expenses would rise going forward, given that all its stores are back open.
Best Buy pulled its financial forecast for fiscal 2021, citing the global uncertainty caused by the coronavirus pandemic. Chief Financial Officer Matt Bilunas commented:
"As we plan for the back half of the year, we continue to weigh many factors including potential future government stimulus actions, the current shift in personal consumption expenditures from areas like travel and dining out, the possible depth and duration of the pandemic, the risk of higher unemployment over time, and the availability of inventory to match customer demand."
Disclosure: I do not hold any positions in the stocks mentioned.
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