Best Buy second-quarter online sales growth slows, shares drop

(Reuters) – Best Buy Co Inc (BBY.N) on Tuesday reported online sales growth that decelerated from the previous quarter, sending its shares down 5 percent in premarket trade.

Shoppers wait in line outside a Best Buy electronics store in Westbury, New York, U.S., November 24, 2017. REUTERS/Shannon Stapleton

The U.S. consumer electronics retailer said domestic online sales rose 10.1 percent in its second quarter. That compared with 12 percent in the first quarter and 31.2 percent in the same period a year ago.

The retailer’s online performance overshadowed an otherwise strong quarterly performance, where its sales and profit beat estimates helped by a strong economy. The company also raised its annual sales and earnings guidance.

U.S. consumers are spending more, encouraged by rising wages, low unemployment and tax cuts, spurring sales at most retailers this quarter, including Best Buy rivals Target Corp (TGT.N) and Walmart Inc (WMT.N), which also sell consumer electronics.

Best Buy has about 15 percent of the U.S. consumer electronics market. Together with Amazon, they have about 25 percent, leaving room to grow, Best Buy Chief Executive Hubert Joly told Reuters in March.

Earlier this month, the Richfield, Minnesota-based retailer said it would buy health services provider GreatCall Inc for $800 million in cash, its largest acquisition ever, hoping to sell health-related products and services to an aging U.S. population.

Best Buy said second quarter same-store sales, or sales at stores open at least a year, rose 6.2 percent in the quarter, ended Aug. 4, versus analysts’ estimates of a 3.8 percent rise.

Net income rose to $244 million, or 86 cents per share, in the quarter, from $209 million, or 67 cents per share, a year earlier.

Excluding charges, Best Buy earned 91 cents per share.

Analysts expected 83 cents, according to Thomson Reuters I/B/E/S.

Revenue rose to $9.38 billion, beating estimates of $9.28 billion.

Best Buy shares have risen about 20 percent so far this year.

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