Best Buy continues to navigate the bricks-to-clicks transition with strong online sales growth in the second quarter. However, the retailer tightened its full-year revenue outlook amid general economic uncertainty and concerns regarding tariffs on goods from China. Best Buy's enterprise revenue also fell short of expectations.
The company reported second quarter non-GAAP earnings of $1.08 a share on revenue of $9.54 billion. GAAP earnings for the quarter were 89 cents a share. Wall Street was looking for non-GAAP first quarter earnings of 99 cents a share on revenue of $9.55 billion.
Online revenue for Best Buy was $1.42 billion in the quarter, or 16.1% of US revenue. Same store sales were up 1.6% in the quarter with online sales up 17.3%.
Best Buy said US revenue was bolstered by GreatCall with gains offset by 13 large format store closings. Comp sales were driven by revenue growth in appliances, tablets, headphones and services categories.
For the third quarter, Best Buy is projecting revenue of $9.65 billion to $9.75 billion with same store sales of 0.5% to 1.5% with non-GAAP earnings of $1.00 a share to $1.05 a share. As for the fiscal year, Best Buy narrowed its previous forecast and now expects revenue between $43.1 billion to $43.6 billion, compared to $43.6 billion projected by analysts. Last quarter the company called for full year revenue between $42.9 billion to $43.9 billion. Same store sales for the year are expected to range from 0.7% and 1.7% with non-GAAP earnings of $5.60 to $5.75 a share.
Shares of Best Buy were down more than 9% in early trading.
Best Buy CFO Matt Bilunas said the updated guidance incorporates "our best estimate of the impact of recent announcements regarding tariffs on goods from China [as well as] our better-than-expected first half earnings; and general uncertainty related to overall customer buying behavior in the back half of the year."
Best Buy has made considerable investments to bolster the capacity in its supply chain and improve online experiences. The retailer has also doubled down on services with its Total Tech Support offering and In-Home Advisor program.
Best Buy CEO Corie Barry said the company grew its Total Tech Support membership, added In-Home Advisors and continued to improve its supply chain during the quarter.
"We also delivered improved profitability driven by gross profit rate expansion and continued disciplined expense management, demonstrating the culture we have built around driving cost reductions and efficiencies to help fund investments," Barry said.