Why Is Best Buy Soaring When Other Retailers Are Struggling?

With the release of Best Buy’s (BBY) third-quarter earnings report on Tuesday, the retailer saw its share price soar over 3% in pre-market trading as it posted better than expected earnings.

Best Buy announced a 1.7% comparable sales increase as well as a GAAP diluted EPS increase of 11%. Non-GAAP diluted EPS was up 22% to $1.13. Comparable sales increased in the categories of appliances, headphones, tablets, services, and computing while the company saw a decline in gaming and home theater products.

Total revenue for the company was $9.764 billion compared to $9.590 billion in Q3 of fiscal 2019, which Best Buy contributed to acquisition of GreatCall Inc., which was also offset by previously announced store closures, the company said.

Online sales also increased by 15% on a comparable basis, which Best Buy said was based on a higher average value of online orders.

The tech retailer also saw its domestic revenue increase from $8.756 billion to $8.964 billion, while its international business lagged with revenues at $800 million compared to $834 million in the third quarter of fiscal 2019. Best Buy said the decrease in international revenue was due to Canada and its foreign exchange rate.

“Our teams delivered another strong quarter of top- and bottom-line growth,” Corie Barry, Best Buy CEO said. “We are delivering on our purpose to enrich lives through technology by providing customers the products and solutions they want and need, combined with fast and convenient fulfillment. We are excited about our progress and opportunities as we execute on our Building the New Blue strategy, designed to develop deeper relationships with our customers and uniquely position us over the long term.”

Based on its Q3 fiscal 2020 performance, Best Buy raised its full-year guidance, expecting revenues of $43.2 billion to $43.6 billion. This is an increase from its previous revenue guidance of $43.1 billion to $43.6 billion.

Comparable sales for the company are also expected to grow from 1 to 2%, up from the previous guidance of 0.7 to 1.7%. Non-GAAP operating income is anticipated to increase slightly while Non-GAAP diluted EPS is expected to range from $5.81 to $5.91 compared to the previous guidance of $5.60 to $5.75.

For fiscal Q4, Best Buy also expects growth with revenue ranging from $14.75 to $15.15 billion, while comparable sales are expected to increase by 0.5 to 3%.

“The updated FY20 guidance we are providing today reiterates our prior revenue expectations and raises the non-GAAP EPS range to reflect the strong Q3 profitability as well as improved expectations for Q4,” Matt Bilunas, Best Buy CFO Matt Bilunas said. “Our outlook continues to include our best estimate of the impact of tariffs on goods from China, both implemented and planned.”

Shares of Best Buy stock were up 4.77% as of 9:34 a.m. EST on Tuesday.