Best Buy (NYSE: BBY) released third quarter earnings today, Nov. 19, posting an increase in profit while also expressing concerns about a tough competitive environment for the holiday shopping season.
The company reported net income of $54 million, or 16 cents per share, compared with a loss of $10 million, or 3 cents per share, in the third quarter of last year. Revenue was nearly flat at $9.36 billion, barely missing analysts' expected revenue of $9.37 billion. Same-store sales rose slightly by 0.3 percent.
The holiday season is critical for the electronics retailer as consumers stock up on phones, gaming systems, TVs and other gadgets for gift-giving. With six fewer days between Thanksgiving and Christmas this year and steep holiday discounts and promotions to compete with, Best Buy warned that margins may suffer in the fourth quarter.
"If our competition is in fact more promotional in the fourth quarter, we will be too, and that will have a negative impact on our gross margin," Best Buy CFO Sharon McCollam said in a statement.
Best Buy is one of eight major retailers that will be open on Thanksgiving Day to get a jump on Black Friday sales. The store will welcome shoppers at 6 p.m. nationwide, much earlier than last year's midnight opening.
"In light of our competitors' decisions to open early for Black Friday, we too are opening our stores at 6 p.m. on Thanksgiving Day and not closing them until late evening on Black Friday," said McCollam. "This requires increased promotional offers and an incremental investment in store payroll. But again, it's table stakes."
Shares fell $2.76, or 6.3 percent, to $40.80 in premarket trading Tuesday.
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