Home Stocks Best Buy Co In Earnings Beat Estimates, Shares Spike

Best Buy Co In Earnings Beat Estimates, Shares Spike

When you purchase through our sponsored links, we may earn a commission. By using this website you agree to our T&Cs.

It is only eight days till Black Friday and the official start to the holiday shopping season. Retailers are setting up their deals and trying to remain competitive in a market filled with competition.  Some retailers will open around 5-6pm on Thanksgiving Day, but the following Monday, Cyber Monday, is said to future very similar deals as to those on Black Friday. Online shopping is forecasted to rise 8-11% and regular brick and mortar sales are predicted to rise 4.1%.  However, as we rapidly approach the holiday shopping season, I am paying attention to retail third quarter earnings.  Yesterday, I covered Target Corporation (NYSE:TGT) and Lowe’s Companies, Inc. (NYSE:LOW). Today, we saw another huge retailer release third quarter earnings, Best Buy Co Inc (NYSE:BBY).

Best Buy’s 3Q earnings

Best Buy Co Inc (NYSE:BBY) reported quarterly earnings of $9.38 billion in total revenue on earnings per share of $0.32.  This comes after Best Buy continues to cut costs and finally snaps a seven quarter losing streak.  US same store sales rose 3.2% and total same store sales came out at 2.2%.  .  Management said they were able to slash “general and administrative expenses” by 5%, all the while, doubling operating margins to equal 2% of total revenue.  Since Best Buy founder, Hubert Joly, came back to run a failing Best Buy in 2012, he began to cut jobs, close underperforming stores, cut red tape and boost the company’s cash reserves.  Additionally, the company saw its tax rate cut from 44.4% to 39.4%.   Two years later, we are finally beginning to see drastic steps and successful outcomes from the revival plans set forth by Joly.  Shares are up nearly 7% in early trading Thursday.

Overall, this is very positive earnings announcement for Best Buy Co Inc (NYSE:BBY), who has significantly turned its business around since 2012.  During 2012, it appeared at Best Buy could possibly go out of business, as the company was not very competitive, and customers preferred shopping online through retailers such as Amazon.com, Inc. (NASDAQ:AMZN).  However, the company has been able to revamp its image and offer some eye-popping deals this Black Friday on HDTVs to handheld electronics.

Best Buys’ Black Friday deals

With this quarterly earnings beat and a resurgence of Best Buy Co Inc (NYSE:BBY), is the recovery over for Best Buy?  Are they poised to be even more dominant than they were years ago?  It is a little hard to speculate from here, but the company has done a great job with answers the problems of 2012: cut bleeding stores, cut jobs, offer deals competitive with Amazon.com, Inc. (NASDAQ:AMZN) and other online retailers, begin to offer blockbuster Black Friday deals.  I am confident about Best Buy’s holiday shopping season and it is one of the few retailers I really think will be able to capitalize on the season.  Earnings were very encouraging about the future, but now Best Buy needs to dominate Black Friday and Cyber Monday to be labeled “officially recovered”. There has been huge strides, but we need to see a continuation and a trend develop based on these earnings.

Disclosure: No positions

Our Editorial Standards

At ValueWalk, we’re committed to providing accurate, research-backed information. Our editors go above and beyond to ensure our content is trustworthy and transparent.

Sheeraz Raza

Want Financial Guidance Sent Straight to You?

  • Pop your email in the box, and you'll receive bi-weekly emails from ValueWalk.
  • We never send spam — only the latest financial news and guides to help you take charge of your financial future.