When good isn't good enough.
Best Buy (BBY - Get Report) second quarter earnings smashed Wall Street estimates on Tuesday, coming in at 91 cents a share vs. forecasts for 82 cents a share. Best Buy saw solid sales growth in its stores (up 6.2% vs. estimates for up 4.1%) and online (up 10.1%). The company raised its full year sales and profit outlooks as well.
But investors opted to sell the news. Shares of the electronics retailer dropped as much as 8% in early trading. Here is what caught TheStreet's attention, perhaps explaining the initial market reaction:
- Online sales growth in the quarter of 10.1% slowed sharply compared to the year ago growth rate of 31.2%.
- Third quarter earnings are seen in a range of 79 cents to 84 cents a share. The market expected 92 cents a share.
- Gross profit margin fell 20 basis points from the prior year to 23.8%.