Best Buy Shares Drop After Full-Year Comparable-Sales Guidance Cut Over Possible Tariffs

10:36 AM, Aug 29, 2019 — Best Buy (BBY) shares fell after the electronics retailer narrowed its full-year comparable-store sales guidance over worries about possible tariffs on Chinese-made goods and overall customer spending in the second half of the year.

The Minneapolis-based company said comparable sales this year are expected to rise between 0.7% to 1.7%, compared to 0.5% to 2.5% previously and below the consensus compiled by Capital IQ for 2%.

Best Buy raised its enterprise revenue outlook for the year to $43.1 billion to $43.6 billion from $42.9 billion to $43.9 billion while the Street is expecting $43.59 billion. Non-GAAP diluted per-share earnings are seen coming in between $5.60 to $5.75, up from $5.45 to $5.65. The Street’s view is for $5.71.

Best Buy was down more than 9.1% in morning trading.

For the quarter ended Aug. 3, enterprise revenue rose to $9.54 billion from $9.38 billion in the prior-year period. The Street had expected $9.55 billion. Non-GAAP diluted EPS rose to $1.08 from $0.91 last year, well ahead of the Street’s $0.99 consensus.

Comparable-store sales gained 1.6%, below the Street’s expectation for 2.1%.

Chief Executive Corie Barry said Best Buy “also delivered improved profitability driven by gross profit rate expansion and continued disciplined expense management, demonstrating the culture we have built around driving cost reductions and efficiencies to help fund investments.”

Domestic revenue rose 2.1% to $8.82 billion in the just-ended quarter, with sales riven by appliances, tablets, headphones and services. Online revenue rose 17% on higher average order values and traffic.

International revenue fell 3.4% to $715 million on a comparable sales decline driven by Canada and foreign-exchange headwinds.

For the current quarter, Best Buy said it expects $9.65 billion to $9.75 billion, below the Street’s view for $9.78 billion. Non-GAAP diluted EPS is expected to come in between $1 and $1.05, ahead of the Street’s $0.94 expectation.

Companies: Best Buy Co., Inc.
Price: 62.24 Price Change: -6.76 Percent Change: -9.80

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