Best Buy beat Wall Street profit estimates for the third quarter and the Business Journal reports that the Richfield retailer also turned in its first quarterly same-store sales growth of 2013. Despite that, the Associated Press says the company's prediction of a competitive environment during the crucial holiday season prompted a drop of 6 percent in premarket trading.
Best Buy's revenue was nearly flat at $9.36 billion. Analysts expected revenue of $9.37 billion. Revenue in stores open at least one year, a key retail metric, rose 0.3 percent. That includes a sales increase of 1.7 percent in the U.S. and a 15.1 percent increase in online sales.
An MPR analysis looked at the stock's historic turnaround. Sixteen analysts following Best Buy have rated the stock a buy. The stock has more than tripled since the beginning of the year and hit a two-year high last week. A year ago, just two analysts recommended the stock. Analysts credit the turnaround on smart moves by new leadership, including CEO Hubert Joly.
"A lot of credit goes to management for executing on really what was the only viable turn-around plan — to partner with other vendors, to build out stores within stores, to really go after this price-matching concept." Morningstar retail analyst R.J. Hottovy said.
Best Buy has cut costs, added employee training and matched online prices to get customers into stores as it faces competition from discounters and online retailers. But an analyst at Edward Jones said the company is still losing sales to competitors, which raises doubts about how well it can perform long term.