Best Buy Q2 Earnings Report: Will Tariffs, Consumer Buying Behavior Affect Its Future Growth?
Summary
The company has also adjusted its guidance for the third quarter and year-end fiscal 2020, citing tariffs and uncertainty in “consumer buying behavior.” “For the second quarter, we are reporting comparable sales growth of 1.6% on top of a very strong 6.2% last year,” Corie Barry, Best Buy CEO said. “We also delivered improved profitability driven by gross profit rate expansion and continued disciplined expense management, demonstrating the culture we have built around driving cost reductions and efficiencies to help fund investments.” In Q2, Best Buy saw its domestic revenue increase 2.1 percent over last year to $8.82 billion, which it said was driven by a 1.9 percent comparable sales growth and additional revenue from GreatCall, Inc., which it acquired in Q3 of fiscal year 2019. While the majority of sales domestically for Best Buy came from appliances, tablets, headphones, and services; it saw a decrease in its gaming and home theater categories. For Q3 fiscal 2020, Best Buy has adjusted its financial outlook to see a revenue of $9.65 to $9.75 billion and a comparable sales growth of 0.5 to 1.5 percent. “This updated guidance factors in the following: (1) our best estimate of the impact of recent announcements regarding tariffs on goods from China, including the increase to 30% for List 3 and 15% for List 4; (2) our better-than-expected first half earnings; and (3) general uncertainty related to overall customer buying behavior in the back half of the year.” Shares of Best Buy stock were down 9.66 percent as of 10:36 a.m.