Best Buy Q3 strong, but Q4 sales hit by Samsung Galaxy Note 7 recall

Best Buy's fourth quarter earnings outlook wasn't changed, but sales will take a $200 million hit due to Samsung's Galaxy Note 7 recall.
Written by Larry Dignan, Contributor

Samsung's Galaxy Note 7 recall will cost Best Buy about $200 million in the fourth quarter as the electronics retailer delivered better-than-expected results.

Best Buy didn't mention Samsung by name, but a spokesperson said that impact of the Galaxy Note 7 recall will hurt comparable sales in the fourth quarter by 1.5 percentage points. Best Buy maintained its fourth quarter earnings outlook.

CFO Corie Barry said:

From a revenue standpoint, we are excited by the rate of technology innovation, the quality of our assortment and our ability to execute. That being said, we have updated our original expectations to incorporate the impact of recent product recalls and the fact that certain products will simply not be available for sale during our fourth quarter.

The company reported third quarter earnings of 60 cents a share on revenue of $8.94 billion, up from $8.82 billion a year ago. U.S. same store sales rose 1.8 percent. Wall Street was expecting earnings of 47 cents a share on revenue of $8.85 billion for the third quarter.

Online revenue in the U.S. was up 24.1 percent in the third quarter to $881 million.

CEO Hubert Joly said the technology innovation is solid for the holiday shopping season. Joly said the company has aligned its digital marketing tools, assortment and in-store experience to grow sales.

For the fourth quarter, Best Buy projected non-GAAP earnings of $1.62 to $1.67 a share on revenue of $13.4 billion to $13.6 billion. Same store sales will be in a range of down 1 percent to up 1 percent. Domestic sales are expected to be stronger than international. Wall Street was looking for non-GAAP earnings of $1.58 for the fourth quarter on revenue of $13.7 billion.

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