Best Buy Co Inc (NYSE: BBY) reported better-than-expected first-quarter earnings and revenue numbers Thursday morning, but the stock dropped more than 7 percent after Best Buy said online sales growth declined during the quarter.
Despite the market’s negative reaction, Best Buy delivered yet another quarter of impressive same-store sales growth, and analysts say Best Buy’s turnaround strategy has been executed flawlessly.
[See: 7 of the Best Stocks to Buy for 2018.]
Best Buy reported first-quarter adjusted earnings per share of 82 cents and revenue of $9.10 billion. Analysts had expected EPS of 74 cents and revenue of $8.74 billion. Revenue was up 6.8 percent from a year ago.
Best Buy also reported same-store sales growth of 7.1 percent, well above consensus estimates of 2.9 percent. The company’s first-quarter performance comes on the heels of 9 percent same-store sales growth in the previous quarter, Best Buy’s best fourth-quarter growth number since 2003.
Domestic revenue was up 6.3 percent to $8.41 billion. International revenue shot up 13.1 percent to $697 million.
Domestic online sales were $1.14 billion, up 12 percent. The weakness in Best Buy’s stock on Thursday may be due to domestic online sales growth falling from 17.9 percent in the fourth quarter and 22.5 percent in the first quarter a year ago.
In a statement, CEO Hubert Joly said Best Buy is taking advantage of an opportunity-rich environment.
“This strong performance was broad-based, with positive comparable sales across all channels, geographies and most of our product categories,” Joly said. “We are investing in technology, people and supply chain in support of our strategy.”
Best Buy guided for second-quarter revenue between $9.1 billion and $9.2 billion and same-store sales growth between 3 percent and 4 percent. Best Buy is also forecasting second-quarter adjusted EPS of 77 cents to 82 cents.
The company did not update its previous full-year guidance of $41 billion to $42 billion in revenue, same-store sales growth between zero and 2 percent and adjusted EPS between $4.80 and $5.
Bank of America analyst Curtis Nagle says Best Buy is consistently growing organic sales and gaining market share from competitors.
[See: 7 of the Best Blue-Chip Stocks to Buy for 2018.]
“We believe that BBY is well positioned to benefit from strong consumer electronic product cycles and see ample room for accelerated capital return,” Nagle says.
Bank of America has a “buy” rating and $87 price target for BBY stock.
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Best Buy Co Inc (BBY) Stock Slumps From Online Sales Slowdown originally appeared on usnews.com
