Best Buy Co. Inc., the nation's largest consumer electronics retailer, delivered robust earnings on strong sales Tuesday — further evidence that shoppers are doling out more money for GPS navigators and game consoles than for apparel and shoes.
For the three months ended Dec. 1, earnings leapt 34.2 percent to $228 million, or 53 cents a diluted share, from $150 million, or 31 cents, in the year-ago period. This growth is attributed to new store openings, an increase in the average selling price of key goods, as well as an extra week of post-Thanksgiving revenue. Sales for the quarter grew 14.7 percent to $9.9 billion from $8.4 billion in the same period last year. Domestic and international revenue jumped 15 and 32 percent, respectively, as a favorable foreign exchange rate, coupled with the opening of new stores, bolstered sales.
The retailer's results quantify recent government spending data that shows a shift in consumer spending away from apparel and shoes. According to the Bureau of Economic Analysis, real personal consumption expenditures on apparel and shoes grew 0.3 percent from the second quarter of this year to the third quarter. This compares with 2.4 percent for furniture and household equipment, which includes consumer electronics. Year-over-year, expenditures in home goods climbed 8 percent versus apparel and shoes' 2.1 percent gain.
Top sellers for Best Buy as it was heading into the critical holiday shopping season included flat-panel TVs, game consoles (and related software) and GPS navigation devices.
But similar to its apparel retail counterparts, Best Buy's strong sales growth is coming at the expense of gross margins. Goldman Sachs retail analyst Matthew J. Fassler said in a research note that the "quality of [Best Buy's] earnings was solid. That said, we would point out that gross margin, while it beat published consensus, met, rather than beat, our forecast."
Best Buy raised its full-year earnings guidance to a range of $3.10 to $3.20 a diluted share from $3 to $3.15.
A grooming moment between @tanfrance and @antoni last night at the The LGBT Community Center Trailblazer Awards honoring Anna Wintour, Ricky Martin and more. See more photos at WWD.com #wwdeye (📷: @lexieblacklock)
“It was a very surreal feeling. It wasn’t like we were in the studio together coming up with it — it’s more like he discovered it and loved it. I didn’t let myself get my hopes up, but then it happened it was very exciting,” said singer-songwriter @nombe on discovering that @pharrell would be using his song, “Cant Catch Me” on his HBO documentary series “Outpost.” The German-born singer — named Noah MacBeth — talked to WWD about feminism, using art as a platform for political expression and personal style. Read more on WWD.com #wwdeye (📷: @jilliansollazzo)
This season, denim is going west – in influence. Brands like @fathersdaughterla (pictured here), @tommyhilfiger Jeans, @levis and more are opting for raw, top-stitching styles. (Styled by @thealexbadia; 📷: @ryanplett)
20-year-old British singer @jorjasmith_ made her debut at Coachella last weekend. We caught up with her and talked about her love for Amy Winehouse, working with Kendrick Lamar on the “Black Panther” album and her fashion philosophy. Read the interview on WWD.com #wwdeye (📷: @katiedaisyla)
Supermodel @helenachristensen teamed up with longtime friend and designer @camillastaerk on a joint @paredeyewear collaboration. The lineup features three styles and 11 offerings, all of which embody a vintage feel. Get all the details on how they celebrated the collab on WWD.com. #wwdaccessories #wwdeye (📷: @slovekinpics)
“It’s a hard industry to keep motivated, as well, so finding different subjects and people is what makes it worth it – when you’re like, oh, I’ve met great people, I feel like I’ve done something good, and I feel proud of having done this,” said French actress Stacy Martin on being grateful for the variety of roles she’s take on. Read @ktauer’s full interview with Martin on her her latest film “Godard Mon Amour.” #wwdeye (📷: @danieldorsa)