Best Buy Q2 Earnings: What Are We Expecting?
Best Buy‘s (NYSE:BBY) is scheduled to announce its second quarter results on Tuesday, August 23. The company reported better than expected results in the first quarter, with both revenue and earnings coming in ahead of the market expectations. The retailer’s enterprise revenue declined 0.8% year-over-year (y-o-y) to $8.44 billion, easily exceeding the Reuters’ compiled consensus estimates of $8.29 billion. It posted non-GAAP earnings of $0.44 per share in the first quarter versus $0.37 in the same period an year ago.
Consumer electronics, the company’s second-largest segment within the domestic business, saw 6% comparable sales growth in Q1 2017. However, the company’s consumer electronics segment may underperform comparatively going forward due to low 4K TV demand.
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In May this year, Facebook rolled out its Oculus Rift virtual reality headset in 48 Best Buy stores across the U.S. where consumers could try the device. This move could impact Best Buy’s comparable sales by attracting customers to its physical stores in the coming quarters. Moreover, high demand for VR devices could lead to additional revenue and help improve comparable sales growth within the company’s Entertainment products. In Q1 2017, Entertainment products contributed 6% of the Best Buy’s U.S. revenue.
Furthermore, the company expects its international revenues to decline 5 to 10% in the second quarter, owing to fluctuations in foreign currency and ongoing soft performance in Canada. The company’s international revenue declined 8.1% to $614 million in the first quarter. We expect the trend to continue in the second quarter as well.
Best Buy’s management expects its Enterprise revenue to be in the range of $8.35-$8.45 billion, Enterprise and Domestic comparable sales to be approximately flat and earnings per share to range between $0.38 to $0.42 in the second quarter. The domestic comparable sales are likely to be affected by continued softness in the mobile and tablet categories.
Reuters’ compiled analyst estimates forecast revenues of $8.40 billion and earnings of $0.43 per share in Q2, in line with the guidance.
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