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Best Buy Stock Tumbles After Q3 Earnings Beat, Soft Holiday Sales Forecast

Best Buy forecast softer-than-expected same-store sales over the holiday period as supply chain disruptions ripple through into the retail electronics sector.

Best Buy Co Inc.  (BBY) - Get Best Buy Co., Inc. Report posted stronger-than-expected third quarter earnings Tuesday, but forecast weaker same-store sales over the holiday period as supply chain disruptions ripple through into the retail electronics sector. 

Best Buy said non-GAAP earnings for the three months ending in October came in at $2.08 per share, 2 cent increase from the same period last year and well ahead of the Street consensus forecast of $1.91 per share. Group revenues, Best Buy said, were largely flat to last year at $11.91 billion, but topped analysts' forecasts of an $11.56 billion tally. Same-store sales, Best Buy said, rose 2% from last year, beating the Refinitiv forecast of a 0.7% decline, 

Looking into the final months of the year, Best Buy lifted its revenue forecast to a range of between $51.8 to $52.3 billion, a modest $300 million increase from the higher end of its prior forecast, and said same-store sales would rise between 10.5% and 11.5%.

Same-store sale for the fourth quarter, however, were forecast in the range of -2% to +1%, compared to the Refinitiv estimate of a 0.1% gain.

“We delivered record Q3 results, including 2% Domestic comparable sales on top of 22.6% last year, as our leaders continued to drive new ways of operating and our employees continued to do amazing things to support our customer’s technology needs in knowledgeable, fast and convenient ways,” said CEO Corie Barry. “Our omnichannel capabilities and our ability to inspire and support across all of technology in a way no one else can means we are uniquely positioned to seize the opportunity in this environment and in the future.”

“More people continue to sustainably work, entertain, cook and connect at home, and while customers are returning to stores, digital sales were still more than double pre-pandemic levels, and phone, chat and in-home sales continued to grow,” she added. “During the third quarter, we reached our fastest small-package online shipping times ever as our same-day delivery was up 400% and we nearly doubled the percent of products delivered within one day compared to last year.”

Best Buy shares were marked 15.85% lower in early trading immediately following the earnings release to change hands at $116. each.

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Foot Locker's solid October quarter followed robust updates from department store stalwarts Macy's  (M) - Get Macy's Inc Report and Kohl's  (KSS) - Get Kohl's Corporation Report earlier this week, as well as a much stronger-than-expected reading for October retail sales.

Macy's posted stronger-than-expected third quarter earnings of 76 cents per share Thursday while lifting its full-year sales and profit guidance, while Koh's topped forecast with a bottom line of $1.65 per share as U.S. department stores follow larger big-box retailers with inflation-defying sales gains and holiday-quarter outlooks.

U.S. retail sales jumped for a third consecutive month in October, data from the Commerce Department indicated Tuesday, rising 1.7% to a collective $638.2 billion as consumers continue to shrug-off surging inflation pressures thanks in part to job market gains and improving wages.

Inflation continues to hover over the retail sector, however, after consumer price inflation accelerated to the fastest pace in three decades last month as record-high energy prices and supply chain disruptions lifted the heading reading to 6.2%.