A shopper pushes a cart with a TV in front of a Best Buy store in Chicago, Illinois, November 25, 2022.
Jim Vondrowska | Reuters
Best Buy on Tuesday beat quarterly sales forecasts on Wall Street, but moderated forecasts for the rest of the year as it feels post-pandemic spending slumps on kitchen appliances, computer monitors and other electronics.
Chief Executive Cory Barry said the company still expects this year to be “the low point in demand for the technology” before sales rebound.
“In the coming year, the consumer electronics industry should experience stability and possibly growth driven by natural upgrade and replacement cycles and the normalization of technological innovation,” she said in a press release.
Here’s what the company did for the fiscal second quarter that ended July 29, compared to what Wall Street was expecting, based on a survey of analysts conducted by Refinitiv:
- Earnings per share: $1.22 adjusted vs. $1.06 expected
- Revenue: $9.58 billion vs. $9.52 billion expected
Best Buy is seeing a return to pre-pandemic sales levels, as consumers return to more typical spending patterns and feel pressure on their balance sheets due to inflation. Similar to Home Depot and Lowe’s, Best Buy has made huge gains during Covid, fueled by big purchases that people don’t make often.
Over the past year, the consumer electronics retailer has felt the effects of inflation and consumers shifted to spending on experiences. It ended last year’s period when it paused stock buybacks and cut store jobs across the country after lowering its outlook.
In the most recent three-month period, Best Buy’s net income fell to $274 million, or $1.25 per share, from $306 million, or $1.35 per share, a year earlier.
Net sales decreased in the quarter from $10.33 billion in the same period last year.
Similar sales, a key metric that includes online and in-store sales that have been open for at least 14 months, fell 6.2% year-over-year as customers bought fewer appliances, home theaters and mobile phones. On the other hand, the company said, gaming systems were the sales drivers in the quarter.
Online sales in the US fell 7.1% year-on-year, but continued to drive a large portion of the company’s business. And e-commerce accounted for nearly a third of the retailer’s total revenue in the United States, which is roughly in line with last year’s share.
The retailer has narrowed its forecast for the full year. It said it now expects revenue to range from $43.8 billion to $44.5 billion. It had previously forecast between $43.8 billion and $45.2 billion. For like sales, it expects a decline of 4.5% to 6% instead of the previous guidance of 3% to 6%.
However, it raised its earnings forecast slightly. She said she expects adjusted earnings per share of $6 to $6.40 instead of advance guidance of $5.70 to $6.50.
Best Buy shares closed Monday at $74.07, bringing the company’s market capitalization to $16.16 billion. So far this year, the company’s stock is down nearly 8%. That contrasts with the S&P 500’s gains of about 15% over the same period.
This is a developing story. . Please check back for updates