Best Buy Shares Fall Despite Strong Online Sales for This Reason

Electronics retailer Best Buy may have topped estimates on strong online sales in its latest financial report, but shares still fell anyway on lack of a holiday forecast.

This week the company reported third quarter financial results revealing that same-store sales grew by 23% and the company’s online sales in the U.S. saw a staggering growth of 174%.

For the third quarter, Best Buy reported net income of $391 million, or $1.48 per share, from $293 million, or $1.10 per share, a year earlier. Excluding items, it earned $2.06 per share, higher than the $1.70 per share expected by analysts surveyed by Refinitiv.

Revenue grew to 11.85 billion from $9.76 billion a year earlier, which beat Wall Street’s expectations of $11 billion.

The retailer however declined to provide an outlook due to the uncertainty created by the coronavirus pandemic.

“The current environment has underscored our purpose to enrich lives through technology, and the capabilities we are flexing and strengthening now will benefit us going forward as we execute our strategy,” CEO Corie Barry said.

According to the Chief Executive, the company has benefited from Americans spending less on travel and dining out and more on items for their homes.

“Our current way of life in our homes reliant on technology has only reinforced our belief in our strategic direction and purpose,” she said.

Chief Financial Officer Matt Bilunas said the company will have higher supply chain costs from parcel surcharges and sales of videogame consoles. The lower margin of these consoles will pressure profits.

Best Buy has also said it has exited operations in Mexico.

“As you can see, we have been examining our business model from top to bottom, to determine where we may be able to accelerate our strategic efforts,” said Barry.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.