Earnings Preview: Best Buy

Best Buy Co (BBY) is expected to report Q3 earnings before market open Tuesday, Dec. 16, with a conference call scheduled for 10:00 am ET.

Guidance

Analysts are looking for a profit of 25c on revenue of $11.18B. The consensus range is 13c-47c for EPS, and revenue of $9.82B-$11.83B, according to First Call.

Analyst Views

In November, the company lowered its FY09 EPS guidance to approximately $2.30-$2.90 from $3.250-$3.40 vs. First Call consensus of $2.51 and said it was making adjustments to planned levels of discretionary spending and inventory for the remainder of the year. At the same time, Best Buy said its same-store sales for November through February 2009, the remaining four months in FY09, could be down 5%-15%, resulting in an annual SSS decline of 1%-8%.

Best Buy, which faces stiff competition from retailers like Amazon (AMZN), said that falling consumer spending, driven by the recent turmoil in the financial markets and other macro economic factors, has resulted in lower-than-expected revenue and there is still uncertainty regarding future consumer spending, which has limited the company's ability to project revenue for the critical holiday shopping season.

According to a December 7 New York Times article, Best Buy is trimming inventories, cutting back on advertising, and promoting higher margin products and services to absorb the expected slow down in holiday shopping. The company's President, Brian Dunn, said in an interview, "The depth and speed with which the economy stumbled was extraordinary...I've never seen anything like it."