best buy on Thursday announced better-than-expected fiscal second-quarter results and raised its full-year outlook as the company’s recovery shows signs of taking hold.
The electronics retailer said second-quarter sales growth was 4.1%, compared with previous expectations of just 1%, and adjusted operating profit margin “exceeded expectations.” Best Buy said a surge in computing contributed to its strength, driving growth in all major categories.
Best Buy also raised its full-year financial outlook, citing what incoming CEO Jason Bonfig said in a release: “strong first-half results.” The company currently expects revenue to be between $42.3 billion and $42.8 billion, compared with its previous outlook, which ranged from $41.2 billion to $42.1 billion. The company also expects comparable sales to increase by 1.9% to 3%, compared with previous expectations of a 1% decrease to 1% increase.
Still, the company’s stock was down about 7% in Thursday morning trading.
Bonfig told CNBC that he hasn’t seen any dramatic changes in customers, but rather that behavior has been “very consistent from quarter to quarter.” He added that technological innovations increased customer interest throughout the quarter, which likely contributed to the comparable sales increase.
Best Buy said it now expects full-year adjusted earnings per share to be in the range of $6.70 to $6.90, compared with its previous guidance of $6.30 to $6.60 per share.
The company also said its gross margin for the quarter included a $34 million gain from customs duty refunds.
Current CEO Cory Barry told CNBC that the company is in a better position to operate next year compared to this quarter because it has more clarity than usual about tariff refunds.
“We’re trying to be more transparent so that everyone can easily do the math and understand the volumes and understand the strength of the base business even without tariff rebates,” he told CNBC.
According to a survey of analysts by LSEG, the company’s fiscal second quarter results compared to Wall Street expectations:
Earnings per share: $1.47 adjusted vs. $1.38 expected Revenue: $9.78 billion vs. $9.59 billion expected
Best Buy reported net income of $315 million, or $1.48 per share, for the quarter ended Aug. 1, compared with $186 million, or 87 cents per share, in the year-ago period. Adjusted for one-time items, Best Buy reported adjusted earnings of $1.47 per share.
Revenue increased 3.6% from $9.44 billion in the same period last year.
This is the last reporting quarter under current CEO Corey Barry. Mr. Bonfig will take over the reins of the company on November 1, a change in management that is part of a broader strategy to accelerate Best Buy’s business.
“The strength of our second quarter results reflects both the intentional actions we have taken to position our business for growth and the healthy demand environment for our categories,” Bonfig said in a release.
The company reiterated that customers continue to spend, even as they remain focused on value and revenue.
Bonfig told CNBC that while Best Buy sees rising prices in computing, the company is focused on changing its product lineup to ensure it meets the price points customers are looking for.
“We develop our products to make sure we cover those price points, which is a little different than some of our competitors,” Bonfig said.
Bonfig said the company continues to believe in consumer health and is well positioned in categories such as televisions, consumer electronics and phones. He added that the release of Grand Theft Auto 6 in the fourth quarter will further increase interest in the gaming sector.
“We’re very optimistic, but we think customers continue to be resilient and interested in new technology and finding something within their budget. We’ll focus on these sales periods and deals, which is obviously a big thing heading into the holiday season,” Bonfig said.
Electronics retailers have also been hit by tariffs and soaring prices for memory chips. Best Buy said Thursday that it continues to address these industry-wide challenges and that customers are shopping with specific needs and budgets.
Best Buy has reported weaker foot traffic and weaker consumer confidence in recent quarters, leading to weak sales. Bonfig previously told CNBC that he is confident in his ability to innovate the company and its products and improve the customer experience.
As part of that strategy, Best Buy is opening smaller stores to expand its presence in areas where it can’t sustain full-size stores. Bonfig also said the company plans to leverage artificial intelligence to improve the store experience and company processes.
