Best Buy beats expectations and raises guidance, but stock slumps

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Best Buy Co. Inc. BBY, -16.54% reported fiscal third-quarter net income totaling $499 million, or $2.00 per share, up from $391 million, or $1.48 per share, last year. Adjusted EPS of $2.08 beat the FactSet consensus for $1.95. Revenue of $11.91 billion was up from $11.85 billion last year and also ahead of the FactSet consensus for $11.65 billion. Enterprise comparable sales rose 1.6%, with domestic comparable sales up 2% and international comparable sales down 3%. The FactSet consensus was for an enterprise comparable sales decline of 0.2%, and U.S. comparable sales up 0.3%. Gross margin as 23.5% down slightly from 23.6% last year. For the fourth quarter, Best Buy is guiding for revenue of $16.4 billion to $16.9 billion and comparable sales between a 2% decline and 1% growth. The FactSet consensus is for revenue of $15.58 billion and comparable sales growth of 0.1%. For the year, Best Buy raised its revenue outlook to $51.8 billion to $52.3 billion from $51.0 billion to $52.0 billion. Comparable sales growth is expected to be 10.5% to 11.5%, up from previous guidance for 9% to 11% growth. The FactSet consensus is for revenue of $48.32 billion and comparable sales growth of 11.5%. Best Buy shares sank 10.4% in Tuesday premarket trading, but have rallied 38.3% for the year to date while the S&P 500 index SPX, -0.56% is up 24.7% for the period.

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