Best Buy Co Inc (NYSE:BBY) was down more than 6% in trading on Thursday morning as the company released its quarterly results which failed to meet expectations and also warned investors of a weak Q4.
Earnings per share for Q3 totaled $0.78 and fell just under the $0.79 that was expected. Revenues increased 4% year-over-year to $9.32 billion, but this too fell shy of the $9.35 billion that analysts were expecting.
Same-store sales were up 4.4% and also missed expectations of 4.9%.
Not only did the company disappoint in Q3, but it’s softening up investors for a potentially disappointing Q4 as well. Best Buy is expecting an adjusted earnings next quarter between $1.89 to $1.99 per share, while analysts were forecasting $2.03.
With competition continuing to rise from online retailers, we might see the company’s performance only continue to struggle. The upcoming holiday seasons will be a big test of just how well Best Buy is able to compete as more and more consumers spend money online rather than in store.
Best Buy has already had to cut its prices to be more competitive with online retailers but the problem is that it has a different cost structure and physical brick-and-mortar stores bring more overhead costs.
Over the long term it’s hard to see how Best Buy will be able to avoid being the latest casualty in the retail industry. However, over the short term the company has been showing that it can keep up and grow amid rising competition, it’s just a question of how long that can continue for.
