NEW YORK (AP) — Shares of Best Buy fell Tuesday after the nation’s largest consumer electronics chain outlined long-term profit goals that displeased investors.
Best Buy also reiterated that it wasn’t slashing costs as much as it did in past years as it invests more in online services to compete with online leader Amazon.com.
The Richfield, Minnesota, company said Tuesday that for fiscal 2021 it expects earnings per share of $4.75 to $5.00. That represents an 8 to 9 percent compound annual growth rate from fiscal 2017.
Best Buy Co. said that it also expects enterprise revenue of $43 billion for 2021 compared with $39.4 billion in fiscal 2017.
Analysts expected $5.30 per share on revenue of $40.24 billion, according to FactSet.
Best Buy is trying to make itself indispensable to shoppers as people shop more online. It’s been beefing up the customer service in its appliance departments. This fall, it’s showcasing experiences of voice-activated devices from the likes of Amazon’s Alexa-controlled Echo and Google Assistant at 700 stores. Best Buy is also rolling out a free service this month where salespeople will sit with customers at their own homes to help make recommendations on TVs, streaming services and more.
The service, which was tested in five markets, will be expanded to more cities around the country. Amazon, though, has reportedly also been trying out a program that sends its employees to shoppers’ houses for free “smart home” recommendations.
So far, Best Buy’s strategies are resonating with shoppers. Last month, it reported that revenue at U.S. stores open at least a year rose 5.4 percent during the company’s fiscal second quarter, while Wall Street had estimated a 2.2 percent increase. Sales of products like smart home devices, mobile phones, and appliances were especially strong. Online sales soared about 31 percent.
“Building on what we have accomplished, we are excited by the opportunities we have in this next chapter to grow the company by helping customers pursue their passions and enrich their lives with the help of technology, which is a much bigger idea and one that is rich with opportunities,” said Hubert Joly, CEO of Best Buy, in a statement.
Best Buy reduced costs by $1.4 billion over the last five years. But the goal is to deliver another $600 million in cost savings by the end of fiscal 2021.
Shares fell 8 percent, or $4.60, to close at $52.75. Still the stock is up more than 23 percent for the year to date.