(Reuters) – Best Buy Co Inc (BBY.N) took a $100 million hit in the third quarter from the late launch of the iPhone X and gave a profit forecast for the holiday period that fell short of analysts’ estimates, as it competes in a brutal U.S. retail market.
The United States’ largest electronics chain raised its revenue guidance for the full year and said earnings in the crucial fourth quarter when U.S. consumers spend the most would be $1.89 to $1.99 per share, roughly flat from a year earlier.
The earnings forecast for the current quarter and same-store sales growth of 4.4 percent in the third quarter ended Oct. 28 both fell short of analysts’ expectations, sending its shares down about 6 percent in morning trading.
In contrast, retail giant Wal-Mart Inc (WMT.N) beat expectations with its third-quarter figures, citing soaring online sales and hurricane-related purchases of emergency supplies.
Chief Financial Officer Corie Barry said Best Buy was also worried that the iPhone’s $1,000 price tag might weigh on customers’ spending on other electronics in the run-up to Christmas.
“We are quite thoughtful about that share of wallet question, particularly over the holidays when people often go in with a budget and are trying to think about how to stretch that budget as far as they can”, she told a post-earnings call.
Apple (AAPL.O), which in past made devices available within a week or two of unveiling products, in September held back shipping the tenth-anniversary iPhone until November, and instead launched only the iPhone 8 to a tepid response.
Best Buy also raised an online storm by charging $100 more than the base price for unlocked versions of the iPhone X. The company now says it will offer the high-end phone at its original price but only on an installment basis.
Analysts said the unusual iPhone launch – which the company said cost it $100 million in lost third-quarter sales – had likely weighed on store foot traffic.
“It’s going to drive traffic into the store and when that launch is delayed, not only delayed by a few weeks but delayed from Q3 into Q4, you’re going to see other product categories suffer as well,” BTIG analyst, Alan Rifkin said.
With online sellers like Amazon.com Inc (AMZN.O) driving down prices of electronic goods, Best Buy last week added to its long-term policy of price-matching by offering free shipping for the Thanksgiving to Christmas period.
In the latest quarter, Best Buy also said its same-store sales suffered by 15 to 20 basis points from hurricanes in Texas, Florida and Puerto Rico and earthquakes in Mexico.
The Richfield, Minnesota-based company’s net income rose to $239 million, or 78 cents per share, in the third quarter, from $194 million, or 61 cents per share, a year earlier.
Excluding items, Best Buy earned 78 cents per share, in line with analysts’ estimates, according to Thomson Reuters I/B/E/S.
Revenue rose 4.2 percent to $9.32 billion, below expectations of $9.4 billion.
Reporting by Uday Sampath in Bengaluru; Editing by Arun Koyyur and Patrick Graham
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