Retail

Why Best Buy's Q1 Fell Short

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When Best Buy Co. Inc. (NYSE: BBY) released its fiscal first-quarter financial results before the markets opened on Thursday, the retailer said that it had $0.67 in earnings per share (EPS) and $8.56 billion in revenue. That compared with consensus estimates of $0.60 in EPS and $8.35 billion in revenue, as well as the $1.02 per share and $9.14 billion posted in the same period of last year.

During the latest quarter, enterprise comparable sales decreased 5.3% year over year, compared with an increase of 1.1% last year. This consists of domestic comparable sales decreasing 5.7%, domestic comparable online sales increasing 155.4% and international comparable sales increasing 0.2%.

The largest comparable sales growth drivers were computing and gaming. These growth drivers were more than offset by declines in home theater, mobile phones, digital imaging and services.

Domestic revenue totaled $7.92 billion, with online revenue making up about $3.34 billion of these sales. International revenues were $647 million.

Best Buy did not issue guidance for the fiscal second quarter. However, consensus estimates are calling for $0.61 in EPS and $8.33 billion in revenue for the quarter.

Corie Barry, Best Buy’s CEO, commented:

In the middle of Q1, we shifted all our stores to a curbside-only operating model and were able to retain approximately 81% of last year’s sales during the last six weeks of the quarter, even though not a single customer set foot in our stores. The strong sales retention is a testament to the strength of our multi-channel capabilities and the strategic investments we have been making over the past several years.

Best Buy stock closed Wednesday at $81.54, in a 52-week range of $48.11 to $91.99. The consensus price target is $80.22. Following the announcement, the stock was down nearly 4% at $78.50 in early trading indications Thursday.

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