Best Buy Inc., renowned for its electronics retailing prowess, significantly enhanced its earnings forecast for the entire fiscal year on Thursday, buoyed by unexpectedly positive results from its fiscal second-quarter performance. The company reported notable gains particularly in its domestic tablet and computing sectors, marking a shift in consumer preferences as demand surges for these categories. The revised guidance now sees adjusted earnings per share (EPS) anticipated to fall within the range of $6.10 to $6.35 for fiscal 2025, a notable adjustment upward from its previous forecast of $5.75 to $6.20.
This revision places the consensus EPS expected on Capital IQ at $6.10, capturing investors' attention as the stock price surged 13% during Thursday’s trading session. "As we look towards the latter half of the year, we foresee our industry moving towards greater stabilization," remarked Chief Financial Officer Matt Bilunas in an official statement.
"This increase in non-GAAP diluted EPS guidance is a reflection of the stronger-than-expected profitability we experienced in the first half of the year." Best Buy is now projecting revenue between $41.3 billion and $41.9 billion for the ongoing fiscal year. However, this outlook indicates a shift towards the lower end compared to earlier estimates that anticipated revenues around $42.6 billion.
The company believes that comparable sales may retract between 1.5% and 3%, a change from its previous forecast, which suggested sales would remain flat or see a 3% decrease. Analysts expect revenue to settle at $41.79 billion, with same-store sales anticipated to decrease by 1.8% this fiscal year. From a categorical perspective, Best Buy remains optimistic.
Chief Executive Corie Barry expressed confidence during an earnings call, stating, "We continue to expect growth in our computing category and services this year. While several other categories may face declines, we anticipate a progressive improvement in their trends, especially towards the higher end of our annual comparable sales guidance." For the quarter ending on August 3, Best Buy reported an increase in adjusted EPS to $1.34, an uptick from $1.22 the previous year, thus surpassing analysts' estimates of $1.16.
However, the reported revenue for the quarter decreased to $9.29 billion, down from $9.58 billion year-over-year, yet still exceeding market anticipations of $9.25 billion. The drop in comparable sales, which fell by 2.3%, was attributed to challenges within both domestic and international operations.
Market expectations had projected a larger decline of 3.2%. Barry noted that despite these overall declines, the company managed to drive comparable sales growth specifically in its tablet, computing, and service categories. According to Barry, the combined domestic tablet and computing sectors showed an impressive comparable sales growth of 6% year-over-year.
However, this positive growth was offset by contractions observed in appliances, home theater, and gaming segments. Looking ahead, Best Buy anticipates comparable sales for the current quarter to decrease by approximately 1%, with analysts on Capital IQ projecting a slightly tighter estimate of a 0.6% decline in same-store sales for the upcoming quarter.
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