Best Buy forecasts 2021 earnings largely below estimates

Best Buy forecasts 2021 earnings largely below estimates”

At the Minneapolis-based retailer's Investor Day on Tuesday, its first in five years, executives laid out a new strategy of priorities and changes in its merchandising, training and marketing over the next three years.

Best Buy, which plans to offer an improved checkout experience and more training of associates this holiday season, is also expanding its Total Tech Support offering, which provides in-house electronic support 24/7, regardless of where a product was originally purchased.

The electronics retailer is aiming for annual revenue of $43 billion for fiscal 2021, a 9 percent increase from fiscal 2017, which was the final year of the turnaround effort the company referred to as its "Renew Blue" transformation. Best Buy delivered $1.4 billion in cost savings over the last five years.

The company said it expected adjusted earnings of $4.75 to $5.00 per share for the fiscal year ending January 2021.

Best Buy has had four years of positive same-store increases.

With this forecast, Best Buy is reaffirming that its strong second-quarter performance, which featured comparable-sales growth of 5.4%, will not be the new normal.

Best Buy has been a bright spot in the gloomy USA retail environment.

While many retailers are struggling with weak store traffic and slumping profits, Best Buy sees myriad opportunities in the coming years to expand its business. The success of smart speakers like Amazon's Echo has given a boost to the smart home market, and Best Buy plans to capitalize as an increasing number of consumers look to automate their homes.

Providing services is the other big opportunity for Best Buy. Best Buy is also expanding its In-Home Advisor program to all major US markets, providing free in-home consultations. In October, the company will roll out the offering to 450 stores, and will also enhance the smart home areas in all of its stores. "There is an opportunity-rich environment", he said.

Even so, the forecast fell short of analysts' expectations and Best Buy shares were down more than 8 percent by midday, wiping out gains achieved over the summer months. Those include growing its connected home and smartphone businesses and piloting a service called Assured Living that will use technology to help adult children monitor their aging parents.

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