Published: Thu, March 02, 2017
Markets | By Lucia Cruz

Best Buy shares tumble 8 percent as revenue, outlook fall short

Best Buy shares tumble 8 percent as revenue, outlook fall short

Over all, for the quarter ended January 28, Best Buy earned $607 million, or $1.91 a share, up from $479 million, or $1.40 a share, a year ago.

CEO Hubert Joly noted that "revenue was hindered by unprecedented product availability constraints across multiple vendors and categories, only some of which were anticipated".

Shares of the retailer, which also forecast a 1-2 percent decline in current-quarter same-store sales, slumped more than 9 percent in premarket trading.

Comparable store sales in the USA were down 0.9 percent in the quarter and overall revenue was down slightly to $13.48 billion, lower than the $13.62 billion analysts expected.

Best Buy Co. posted a surprise decline in revenue in the final quarter of the year as it struggled to make certain products available to customers.

Looking ahead, Best buy expects to report Q1 EPS in the range of 35 cents to 40 cents, compared with 49 cents expected by Wall Street.

Best Buy had cautioned investors back in November that the Samsung Galaxy Note 7 recall could hurt comparable sales in the fourth quarter by as much as $200 million, and that's now turned out to be the case. Some of Best Buy's fourth quarter pain came from weak demand in gaming and the stagnating demand for once-hot items like tablets and high definition TVs.

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For the year, the company reported profit of $1.23 billion, or $3.81 per share.

Same-store sales of mobile devices fell 4.4%.

Best Buy Chief Financial Officer Corie Barry said it expects meager 1.5% revenue growth this year.

Best Buy shares have risen slightly more than 3 percent since the beginning of the year, while the Standard & Poor's 500 index has increased nearly 6 percent.

Enterprise comparable sales declined 0.7 percent, compared to a 1.7 percent drop previous year.

With fewer planned cost cuts and innovative new electronics on the horizon, analysts have voiced concerns that 2018 could be a tough year for Best Buy, which has been launching buybacks to drive earnings per share growth. Domestic online revenue grew 18% on a comparable basis on increased traffic and better conversion rates.

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