Stock Peaks
Read management/analysts’ comments on quarterly earnings
The sales momentum is likely to pick up during the holiday season, given the recovery in consumer spending aided by the government’s stimulus program. There has been an uptick in the demand for consumer electronic products like personal computers and mobile phones after the COVID-19 outbreak, which accelerated the digital transformation. Best Buy’s impressive omnichannel assets and ability to offer a good customer experience give it an edge. In the most recent quarter, the share of e-commerce sales nearly doubled from the year-ago period.
Concerns
However, continuing supply chain disruption and inventory issues could weigh on overall performance going forward. Margins might come under pressure from the high costs, mainly related to promotional activities and payroll. Also, there are concerns of consumers returning to their pre-pandemic spending habits as the reopening gathers pace, affecting comparable sales.
From Best Buy’s Q2 2022 earnings conference call:
“We continue to be confident in our ability to navigate the ever-changing environment. For the second half of the year, we expect the non-GAAP gross profit rate to be down approximately 30 basis points to last year, which compares to 60 basis points of expansion in the first half of the year. The primary drivers of the sequential decrease include the impact of rolling out total tech, increased promotional activity, and less leverage on our supply chain costs than we experienced in the first half of this year.”
Q3 Data on Tap
Best Buy is scheduled to report its third-quarter results on November 23 before the opening bell, amid expectations for earnings of $1.85 per share, which is down 10% from last year’s level. Analysts’ are looking for revenues of $11.46 billion.
In the second quarter of fiscal 2022, revenues increased 20% annually to $11.8 billion, reflecting a 20% increase in enterprise comparable sales. Adjusted earnings increased by three-fourths to $2.98 per share. The results also topped expectations.
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Shares of Best Buy have gained about 25% so far this year, often outperforming the industry and the broad market. They closed Tuesday’s session at $134.93, which is well above the 52-week average.