Gotrade News - US retail names delivered mixed signals on Wednesday as guidance updates lifted two stocks. Best Buy (BBY) and Dollar Tree (DLTR) jumped premarket while Costco (COST) lagged the Nasdaq.
Best Buy forecast Q2 sales above Wall Street estimates and held FY2027 adjusted EPS guidance at $6.30 to $6.60. Dollar Tree raised its fiscal 2026 adjusted EPS outlook to $6.70 to $7.10, sending shares up roughly 12% in premarket trade.
Key Takeaways
- Best Buy posted Q1 EPS of $1.28 versus the $1.23 estimate and saw shares rise nearly 10% premarket.
- Dollar Tree lifted FY2026 adjusted EPS guidance by $0.20 on both ends after a 120 basis point gross margin gain.
- Costco trades at $1,003.69, down 8.5% from its May high, with a Moderate Buy consensus and $1,093.90 mean target.
Best Buy Eyes AI Hardware Cycle
Best Buy reported Q1 comparable sales growth of 2%, ahead of the roughly 1% analysts expected, according to Investing.com. The retailer cited demand for smartphones, gaming consoles, AI glasses, and health wearables.
CEO Corie Barry will depart at the end of October and company veteran Jason Bonfig will succeed her. Bonfig is expected to focus on higher-margin advertising and marketplace expansion at the chain.
May sales tracked at a high-single-digit pace before an expected slowdown to about 1% in the current quarter. Memory cost pressure was offset by increased computer imports during the quarter.
Michael Ashley Schulman of Cerity Partners told Investing.com the 2026-27 window could be a sweet spot for AI-enabled hardware upgrades. He added that the first generation of AI PCs is becoming more affordable for consumers.
Best Buy is also expanding Geek Squad support services and paid memberships to lift recurring revenue. The chain is leaning into higher-margin advertising and third-party marketplace listings to diversify earnings.
Dollar Tree and Costco Diverge
Dollar Tree posted Q1 sales of $4.97 billion against a $4.96 billion estimate, with EPS at $1.74 versus the $1.54 estimate. Gross profit margin expanded 120 basis points during the quarter.
Per Investing.com, the discount chain pointed to resilient demand from budget-conscious shoppers and a multi-price strategy spanning $1.25, $3, and $5 tiers. Tariff refunds totaled roughly $110 million through May 26.
Easing freight expenses helped offset tariff and supply chain pressures during the period. Rising gasoline prices linked to the Iran conflict also pushed more customers toward value retailers.
Import tariffs on Chinese merchandise were struck down by the Supreme Court but still affect Dollar Tree operations. The company maintained its annual net sales forecast while raising the bottom-line outlook.
Costco shares trade at $1,003.69, down 8.5% from a 52-week high of $1,096.50 set on May 19, Barchart reported. The Nasdaq Composite is up 17.7% over three months and 38.9% over the past 52 weeks.
The warehouse club lifted its quarterly dividend to $1.47 per share from $1.30, extending a 21-year payout track record. Coverage spans 34 analysts at a Moderate Buy consensus with a $1,093.90 mean price target, implying about 9% upside.
Costco still trades above its 200-day moving average after slipping below the 50-day line this week. Walmart, a key benchmark, is up 21.5% over the past 52 weeks per Barchart.
