This bodes well for the retail landscape this holiday season. And, in spite of Samsung, Best Buy is guiding higher. The stock hasn’t been this awesome since 2007, when Tom Tom GPS devices were all the rage.
Reports Q3 (Oct) earnings of $0.62 per share, excluding non-recurring items, $0.15 better than the Capital IQ Consensus of $0.47; revenues rose 1.4% year/year to $8.95 bln vs the $8.85 bln Capital IQ Consensus.
Comps +1.8% vs. +1% guidance.
Domestic revenue of $8.2 billion increased 1.3% versus last year driven by comparable sales growth of 1.8%, partially offset by the loss of revenue from 14 large format and 23 Best Buy Mobile store closures. Industry revenue in the NPD-tracked categories declined 3.1%.4
From a merchandising perspective, comparable sales growth in home theater, mobile phones, wearables and connected home was partially offset by declines in gaming.
Domestic online revenue of $881 million increased 24.1% on a comparable basis primarily due to increased traffic, higher average order values and higher conversion rates. As a percentage of total Domestic revenue, online revenue increased 200 basis points to 10.8% versus 8.8% last year.
Domestic GAAP and non-GAAP gross profit rate was 24.7% versus 24.1% last year. The 60-basis point increase was primarily due to improved margin rates in the computing and home theater categories, which were partially offset by the mobile category.
Co issues mixed guidance for Q4, sees EPS of $1.62-1.67, excluding non-recurring items, vs. $1.58 Capital IQ Consensus Estimate; sees Q4 revs of $13.4-13.6 bln vs. $13.7 bln Capital IQ Consensus; comparable sales change in the range of (1.0%) to 1.0% vs. ests near +1.2%; domestic comparable sales change in the range of (1.0%) to 1.0%; International comparable sales change in the range of (2.0%) to 2.0%“From a revenue standpoint, we are excited by the rate of technology innovation, the quality of our assortment and our ability to execute. That being said, we have updated our original expectations to incorporate the impact of recent product recalls and the fact that certain products will simply not be available for sale during our fourth quarter. The expected impact of these recalls on our fourth quarter Domestic revenue is ~$200 million.”
UPDATE via Briefing.com, notes from call
In store traffic unchanged while ticket and online traffic is up.
Excited about product innovation.
Vendor partnerships continue to benefit the company.
Gross margin strength computing and home theater categories, which were partially offset by the mobile category.
Best Buy is doing well at the high end of the TV/home entertainment space as co offers the best customer experience in terms of offerings and service.
Lower ASP with great products/innovations: 4K, OELD — driving consumer interest.
Streaming devices also doing well.
Computing industry not necessarily doing great but co’s assortment and exclusive offerings/partnerships are a very important strength; MSFT/AAPL
Strength in mobile (iPhone) offset by Samsung recall; AT&T/VZW store within stores growing
iPhone in-line with expectations, not as strong as 6 but better than 6S last year; ability to buy from multiple carries helps supply.
Appliances +3% vs. +16% last year, slowed late in quarter due to Samsung recall and inventory constraints; continuing to gain material market share.
Home automation, drones and VR doing well but still early.
Continues to experimenting with new features to enhance customer service — e.g. in home advisory pilot.
Promotional activity will not be subdued for the holiday this year. Sees Q4 gross margin flattish to slightly higher Y/Y; slightly positive service comps.
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Best Buy doing well and guiding higher almost makes me a believer.