Although earnings were down, Best Buy’s second-quarter comparable sales gained, which helped the company beat Wall Street estimates for the period. The company also worked to rein in tariff-related price increases and discussed home products-related initiatives during a conference call.
A Zacks Investment Research analyst consensus estimate came in at $1.22 per diluted share, with revenues forecasted at $9.2 billion.
Comparable sales were up 1.6% year over year while revenue advanced to $9.44 billion from $9.29 billion in the year-before quarter. Domestic comps were up 1.1% year over year while revenue gained from $8.7 billion to $8.62 billion in the year-past period.
By merchandise category, domestic comparable sales during the quarter increased in the entertainment segment, up 37.5% and in phones, up 3.8% year over year, Best Buy indicated, but declined in appliances, down 8.5%, consumer electronics, down 4.9%, and services, down 1%. Operating income was $251 million versus $383 million in the year-earlier quarter, while adjusted operating income was $369 million versus $381 million.
Best Buy reiterated its full year guidance for revenue of $41.1 billion to $41.9 billion, comps of down 1% to up 1.% and adjusted diluted earnings per share of $6.15 to $6.30.
During a conference call, Corie Barry, Best Buy’s CEO, stated that the company’s tariff mitigation strategies, including collaboration with vendors, had kept proportional price growth below the rate of duty increases.
She also said that Best Buy planned significant launches of small appliances for the holidays, including those with Breville and SharkNinja.
“These will feature expanded assortments to inspire at-home, baristas and chefs, and innovative health and beauty solutions,” she said.
In discussing recently launched initiatives, Barry noted that the company’s announced collaboration with Ikea would soon launch as a pilot program, which will include 1,000-square-foot shops in 10 Texas and Florida stores.
In announcing the financial results, Barry said, “We delivered comparable sales growth of 1.6% in the second quarter, our highest growth in three years. This better-than-expected sales growth was driven by a mix of new technology innovation, our relentless focus on a seamless omni-channel customer experience and our strong vendor partnerships. We have a busy and exciting second half of the year ahead, featuring more tech innovation, new store experiences, and, of course, our newly launched Best Buy Marketplace. Our sales growth momentum has continued into August, driven by strong customer response to our back-to-school sales events.”
Matt Bilunas, Best Buy CFO, added, “The sales growth resulted in a better-than-expected Q2 adjusted operating income rate. Our SG&A expense was as expected, and we saw some gross profit rate mix pressure from the strong growth in gaming and computing. For Q3, we expect comparable sales growth to be similar to what we just delivered in Q2 and the adjusted operating income rate to be similar to last year’s Q3 3.7% rate. We feel good about our Q2 results and are increasingly confident about our plans for the back half of the year. Given the uncertainty of potential tariff impacts in the back half, both on consumers overall as well as our business, we feel it is prudent to maintain the annual guidance we provided last quarter. At this point, we do believe we are trending toward the higher end of our sales range.”
