Slowing online sales hurt Best Buy’s Q2, shares drop
Stock price decline fuelled by slowdown in online sales, expense plans and investor fears
Best Buy said in a statement that domestic online sales rose 10.1 per cent in its second quarter ended August 4th. Photograph: Mohammad Khursheed/Reuters
Best Buy Co on Tuesday reported a drop in quarterly online sales growth and offered a profit forecast for the current quarter that fell short of analyst estimates, sending its shares down more than 5 per cent in afternoon trading.
Chief executive Hubert Joly in a conference call cited a maturing online consumer electronics business for declining web sales growth and said rising transportation costs may pressure current quarter earnings.
Best Buy shares, which have risen more than 20 per cent since the start of the year, fell as much as 8.4 per cent on Tuesday.
The stock price decline was fuelled by a combination of factors like a slowdown in online sales, the impact of future expense plans and investor fears the recent strength in performance may not be sustainable, Jason Benowitz, analyst and senior portfolio manager at The Roosevelt Investment Group said.
“Investors fear that (Best Buy) could be vulnerable to further digital disruption or any signs of a peak as the tax cut stimulus fades and the Federal Reserve continues to tighten monetary policy late in the economic cycle,” he said.
The US consumer electronics retailer said in a statement that domestic online sales rose 10.1 per cent in its second quarter ended August 4th. That compared with 12 per cent in the first quarter and 31.2 per cent in the same period a year ago.
Best Buy’s third-quarter profit forecast also disappointed some investors. - Reuters