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Best Buy earnings top estimates but retailer’s stock tumbles amid higher shipping costs

Customers wait outside of a Best Buy store in downtown Toronto, Ontario on November 23, 2020 to pick up their online orders.

Geoff Robbins | AFP | Getty Images

Best Buy‘s fiscal third-quarter earnings beat estimates on Tuesday, yet shares tumbled as investors worried about rising shipping costs and weaker demand for consumer electronics.

Shares fell more than 10% in premarket trading.

Here’s what the company did for its fiscal third quarter ended Oct. 30 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

Earnings per share: $2.08 adjusted vs. $1.91 expectedRevenue: $11.91 billion vs. $11.58 billion expected

The consumer electronics retailer has seen sales jump during the pandemic, as Americans upgraded the technology in their home offices, bought new appliances for their kitchens and invested in home theaters. During the third-quarter, Best Buy said it saw those trends continue as home theaters and appliances lifted sales, along with smartphones.

Same-store sales in the quarter rose 2% in the U.S., on top of 22.6% growth in the year-ago period. That exceeded the company’s own forecast of same-store sales being flat to down 3% in the quarter.

However, analysts are concerned that Best Buy could see a difficult combination in the year ahead as consumers shift spending to other areas like travel and entertainment. That may force the retailer to offer more promotions on laptops, smartphones and more — even as supply chain related costs remain high.

Best Buy’s third-quarter net income rose to $499 million, or $2.00 per share, from $391 million, or $1.48 per share, a year earlier.

Excluding items, it earned $2.08 per share, higher than the $1.91 per share expected by analysts surveyed by Refinitiv.

Net sales rose to $11.91 billion from $11.85 billion a year earlier, outpacing estimates of $11.58 billion.

As of Monday’s close, Best Buy shares are up 38% this year. Shares touched a 52-week high of $141.97 on Monday and closed at $138.00, up 1.37%. The company’s market value is $33.94 billion.

Read the company’s press release here.

This is breaking news. Please check back for updates.

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