Tags: Best Buy | electronics | retail | growth

Best Buy Tops Estimates After CEO Makes Good on Growth Promise

Tuesday, 25 August 2015 09:03 AM

Best Buy Co. Chief Executive Officer Hubert Joly is making good on the second part of his turnaround plan at the world’s largest electronics chain: revenue growth.

The retailer posted its fourth straight quarter of same-store gains on Tuesday, with growth of 3.8 percent in the latest period. That’s the biggest increase in four years and more than triple the 1 percent projected by analysts, according to estimates compiled by Consensus Metrix. The results sent the stock up as much as 16 percent in early trading.

Joly is in the third year of a comeback bid at Best Buy, with mixed results so far. He initially focused on cutting costs, including selling off foreign divisions in China and Europe. That has left Best Buy as more of a U.S.-focused retailer, which given the relative strength of America’s economy looks like a wise move. But investors have been waiting for a sign that the company can post consistent revenue growth.

After showing signs of progress on that front, Best Buy stock jumped as high as $33.88 in premarket trading. Before the rally, the shares were down 25 percent this year. And they had fallen 10 percent in the past six trading days alone, hurt by the broader market rout and concerns about a slowing global economy.

“These better-than-expected second quarter results are affirmation that our strategy of offering advice, service and convenience at competitive prices is paying off,” Joly said in a statement.

TVs, Phones

Sales were lifted by demand for big-screen TVs, phones and major appliances, the Richfield, Minnesota-based company said. Still, Best Buy voiced uncertainty about future growth, especially with the markets in turmoil this week. In the current quarter, U.S. sales will probably be flat or grow by a low single-digit percentage rate, the company said.

“It is difficult to know, though, if the recent volatility in the financial markets will affect overall consumer spending,” Chief Financial Officer Sharon McCollam said in the statement. “To date, however, we have not seen a measurable impact versus our original expectations.”

Second-quarter profit also topped analysts’ estimates. Earnings amounted to 49 cents a share in the period, excluding some items. Analysts had projected 34 cents for the quarter, which ended Aug. 2.

Joly and McCollam have complained about a lack of hot new tech products that could help drive sales — a problem for the broader electronics industry. Given that reality, Best Buy is searching for ways to generate sales growth on its own. That’s included revamping its website, selling more returned items, and adding space dedicated to home-theater setup.

© Copyright 2018 Bloomberg News. All rights reserved.

1Like our page
Best Buy Chief Executive Officer Hubert Joly is making good on the second part of his turnaround plan at the world's largest electronics chain: revenue growth.
Best Buy, electronics, retail, growth
Tuesday, 25 August 2015 09:03 AM
Newsmax Media, Inc.

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved