Best Buy Plummets on Margin Concerns
Shares of Best Buy Co., Inc. (NYSE:BBY) traded sharply to the downside following concerns stemming from the company’s quarterly report on Tuesday. The company warned of an increasingly promotional environment heading into the holidays and promised to be competitive on price during the season. Following the announcement, many analyst and investors raised concerns about margins in the fourth quarter. Best Buy’s net earnings were $54 million, or 16 cents a share, compared with a net loss of $10 million, or 3 cents a share, a year earlier. Over the last couple years the company has successfully put away fears of bankruptcy and restructured the company.
Excluding restructuring charges and other items, the company earned 18 cents a share, up from 3 cents a share in the year-earlier period. These results beat average analyst estimate of 12 cents. On the top line, the company was able to generate revenues of $9.36 billion in comparison with $9.38 billion a year ago.
At the time of this writing, shares of the company were down by 7.5 percent to $40.30 per share. Year to date, shares of the company are higher by 267 percent, astounding considering the broad market is higher by only 25 percent. In the coming days we will see a number of prominent retailers report their quarterly results. Hopefully both investors and traders alike can get a better glimpse into the holiday season. A tough economic climate across the globe continues to weigh on the shoulders many retailers. Analysts are predicting consumer spending will come in very light during the season. It will be interesting to see if Best Buy can sustain its margins despite the competitive environment. Margins have been and will be in the focus once again during the 2013 season.
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