- Second quarter sales and earnings beat
- Raised full year profit guidance
- Green shoots of recovery
Electronics retailer Best Buy (BBY:NYSE) grew second quarter adjusted EPS (earnings per share) by around 10% to $1.34 compared with Wall Street estimates calling for a drop of around 5%, sending its shares up 14% to a fresh two year high of around $100.
Better than expected trading chimes with data out yesterday (29 Aug) which showed the US economy grew at a faster than expected 3% pace in the second quarter amid strong consumer spending and a rebound in corporate profits.
Analysts at Panmure Liberum believe Best Buy’s comment about entering a new technology replacement cycle has a positive read across for Currys (CURY), which is scheduled to release a trading update alongside its annual general meeting on 5 September.
Currys’ shares were up around 0.5% in early trading.
WHAT DID THE COMPANY SAY?
Best Buy’s chief executive Corie Barry commented: ‘We see a consumer who is seeking value and sales events, and one who is also willing to spend on high price point products when they need to or when there is new compelling technology.’
The company also raised its fiscal year EPS guidance to a range of $6.1 to $6.35, up from $5.75 to $6.20, but lowered the top end of its guidance for net sales and comparable sales.
Second quarter comparable sales dropped by 2.3%, the best performance since the fourth quarter of 2022 and well ahead of analysts’ estimates which called for a 3.2% decline.
TECH GADGETS REPLACEMENT CYCLE
Barry said the industry was seeing a return to growth and Best Buy was well positioned to capture the much-anticipated replacement cycle of pandemic-era technology.
The company is hoping to get a sales boost from a wave of new technology gadgets like the collection of new iPads released by Apple (APPL:NASDAQ) in May and artificial-enabled laptops from Microsoft (MSFT:NASDAQ).
‘We believe we are just at the beginning of the impact of AI on tech innovation and customer demand’, added Barry.
Best Buy has seen a doubling in the number of customers trading in their old electronics for new ones.
