Best Buy boosted its performance in the third quarter, although the retailer warned that the Samsung phone recall could impact its holiday sales results.
For the third quarter ended October 29, Best Buy posted net earnings of $194 million, or 61 cents per diluted share, versus $125 million, or 36 cents per diluted share, in the year-previous quarter. Earnings per diluted share from continuing operations were 60 cents versus 37 cents in the year-earlier quarter. Adjusted diluted earnings per share were 62 cents as compared with 41 cents in the 2015 quarter. Best Buy beat a MarketBeat-published analyst average estimate of 47 cents.
Comparable sales increased 1.8% as total revenue reached $8.95 billion from $8.82 billion in the 2015 quarter. Operating income was $312 million versus $230 million in the quarter a year prior.
In the domestic segment, revenue increased 1.3% to $8.19 billion, driven by comparable sales growth of 1.8% partially offset by revenue lost from 14 large format and 23 Best Buy Mobile store closures. Strongest comp growth came from home theater, mobile phones, wearables and connected home. Gaming comps declined. E-commerce comps increased 24.1%, with total sales reaching $881 million. Digital sales now represent 10.8% of total domestics revenue.
“We are pleased to report today growth on both our top and bottom lines,” said Hubert Joly, Best Buy chairman and CEO. “We are excited by the continued product innovation we are seeing, the role we play for customers, the growth opportunities in front of us, the quality of our execution and the strength of our financial performance.”
In looking forward to the holiday season, Joly added, “As our marketing tagline, Holiday Gifting Made Easy, states, our goal is to make holiday shopping effortless. To win holiday and deliver on this promise, we have created an exciting assortment of great and competitively priced products, and we have mobilized our assets, including our leading-edge digital capabilities, fast and free shipping across the entire site during holiday, and, of course, our knowledgeable Blue Shirts and Geek Squad agents who are here to provide compelling in-store experiences and in-home services.”
However, Corie Barry, Best Buy CFO, noted that, despite good holiday prospects, product recalls, including the Samsung Galaxy Note 7 recall, may impact sales as the year ends. “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 approximately $200 million. With that incorporated, our fourth quarter enterprise revenue guidance is $13.4 to $13.6 billion,” said Barry.