Best Buy reported a 30% year-over-year decline in net income, which fell to 47 cents a share, five cents short of analysts’ expectations. Its revenue also came up short, with $11.35 billion when analysts had forecast $11.47 billion. Finally, the retailer cut its forecast for full-year profits.
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Goldman Sachs (NYSE:GS) analysts have warned that the immediate future of the stock is grim, citing soft product cycles, ongoing pricing pressure from the online channel, and “emerging macro pressure”. While Goldman currently rates the stock a “hold”, in light of lower EBIT guidance, their estimates and target for the stock are now under review.
However, in one positive note, Goldman says that Best Buy has been controlling costs well and is aggressively repurchasing stock, though they “do not foresee shares moving meaningfully higher in the absence of clear evidence of improving sales trends at the chain.” Janney Capital Markets analysts, who currently rate the stock a “buy”, noted one other positive: while Best Buy lowered core guidance range, “the mid-point of their range is above consensus”.
Credit Suisse (NYSE:CS) added that, though Best Buy lowered their guidance, they cut that only modestly. “Given the macro world, and lack of new products, these results were relatively strong,” said Credit Suisse analysts, who last week told investors to ignore the numbers and focus on strategic steps the company would be taking to remain competitive. However, there was no discussion of competitive strategies in this morning’s press release.