Street Doesn’t Cheer Best Buy Co. Inc. (NYSE:BBY)’s Headsup
The $13.2 billion market capped Best Buy Co., Inc. (NYSE:BBY) which runs online and in store retailing chain for consumer goods and electronics in the U.S got a rude shock at the browsers yesterday post its 3Q results and 4Q forecast announcement.
The S&P 500 tracked retailer announced that it had generated net income of $54 million from operations for the third quarter which ended on November 2. It also posted earnings per share of $0.16. Both the call out numbers represented double digit growth for the company in comparison to 3Q12 numbers.
Revenue for the quarter had stagnated at $9.36 billion, marginally above its 3Q12 performance. The distressing factor in the commentary surrounding its revenue numbers was the fact that revenue from its international operations saw a steep 6.4% dip and shaved off all the lustre Best Buy Co., Inc. (NYSE:BBY) has managed to generate with its respectable 1.7% increase in revenue from its U.S. operations. Another feather in the cap for the retailer was the fact that its online revenue went up by a significant 15.1%.
But the damage was caused by the margins warning Best Buy Co., Inc. (NYSE:BBY) red flagged for its 4Q operations. The retailer has been struggling to regain market share from its other deep pocketed and more profitable competition both online and physical stores. In order to maintain its market share, the firm has announced that it will go very aggressive on the mark downs and discount pricing during this holiday season, even if it means its 4Q earnings might take a hit.
Commenting about the prevailing sentiment of management, its Chief Executive Hubert Joly has been quoted as saying, “We want to win the mind and wallet of the customer.” He has indicated that the company is committed to winning the battle of market share this holiday season and has laid out extensive plans including opening stores early on thanksgiving and match the prices that are prevalent online during this period.