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Home / Business / Best Buy Online growth slows and overshadows strong profits

Best Buy Online growth slows and overshadows strong profits



NEW YORK (Reuters) – The Best Buy Co Inc ( BBY.N ), the US consumer electronics retailer, has experienced a slowdown in online sales in the first quarter and has not fully updated it -Year financial outlook, send their shares in early trading.

FILE PHOTO: A Best Buy sign is photographed in front of the electronics store in Cedar Park, Texas, USA, on February 27, 201
7. REUTERS / Mohammad Khursheed / File Photo

Investors have shaken off strong quarterly sales and profits and shares fell 6.2 percent to $ 71.2. They have risen by almost 11 percent since the beginning of the year.

"The quarter was not unaffected, online revenue growth slowed significantly," said Jason Benowitz, analyst and senior portfolio manager, Roosevelt Investment Group.

Best Buy did not update its full-year financial outlook, which could have led Wall Street to assume a fairly steep slowdown in growth, Benowitz said.

The company reiterated its outlook in March.

CEO Hubert Joly said that there is nothing to read in the company that has not updated its outlook, as the retailer's forecast this year was broad.

"We just had the feeling that so much of the year is still ahead," he said. "We are nearing the upper end of our sales margin."

Domestic online revenue growth declined to 12 percent, compared to growth of 22.5 percent a year ago.

Chief Financial Officer Corie Barry said on a call with first quarter investors online sales in the past fiscal year had benefited from product launches such as the Nintendo Switch and the Samsung S8, and the company gained online market share this quarter.

Joly said that the distinction between online sales and store sales is blurring, considering that half of the retailer's online orders are shipped or picked up at the store. "At some point in the future, the separate reporting of online sales may or may not make sense," he said.

Overall sales growth was supported by strong consumer demand and better product innovation. Demand for mobile phones, devices and computers led to comparable sales growth.

Revenues in the mature markets rose 7.1 percent in the first quarter ended May 5, outperforming analysts' average expectations by 2.9 percent, according to Consensus Metrix. Growth, the largest retail business since fiscal 2005, benefited from a lighter comparison with a relatively weak period one year ago.

Despite the slowdown in e-commerce sales in the quarter, the company's turnaround was strong. Best Buy has weathered Amazon.com Inc ( AMZN.O ) better than most retailers. It posted its best holiday quarter performance last year since 2003.

Best Buy has about 15 percent of the US consumer electronics market. Together with Amazon, the two retailers have a market share of about 25 percent, leaving room for growth, Joly told Reuters in March.

The company's investment in price alignment, faster delivery, improved search on its website and better customer service have impacted profitability.

Net income for the quarter increased to $ 208 million, or 72 cents per share, from $ 188 million or 60 cents per share a year earlier.

Excluding items, earnings were 82 cents per share. Analysts expected 74 cents, according to I / B / E / S by Thomson Reuters.

The company's revenue increased to $ 9.10 billion, exceeding estimates of $ 8.74 billion.

Nandita Bose reporting in New York, Additional coverage by Uday Sampath Kumar in Bengaluru; Arrangement by Nick Zieminski


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