People walk past a Best Buy store in Manhattan, New York City on November 22, 2021.
Andrew Kelly | Portal
Best Buy lowered its full-year sales forecast on Tuesday as it weathers a period of cooler demand and prepares for price-conscious holiday shoppers.
The consumer electronics retailer beat Wall Street’s quarterly profit expectations but fell short on sales.
Best Buy now expects revenue of $43.1 billion to $43.7 billion for the fiscal year, down from the previous range of $43.8 billion to $44.5 billion. The retailer said it expects comparable sales to fall 6% to 7.5%, below its previous forecast of 4.5% to 6%.
The company also lowered the high end of its profit forecast, saying it expects adjusted earnings per share to be between $6 and $6.30 instead of between $6 and $6.40.
CEO Corie Barry said in a news release that Best Buy expects weaker consumer electronics sales this year. But given an economic backdrop marked by high inflation and the Federal Reserve’s campaign to cut spending, consumer demand has been “even more uneven and difficult to predict,” she said.
She said the retailer is ready for the holiday season and “prepared for a customer who is very deal-focused with promotions and offers to suit all budgets.”
Here’s how the company performed in the fiscal third quarter compared to Wall Street’s expectations, based on an analyst survey from LSEG, formerly known as Refinitiv:
- Earnings per share: $1.29 adjusted vs. $1.18 expected
- Revenue: $9.76 billion vs. expected $9.90 billion
Best Buy, like home improvement retailers, has seen subdued demand as it has increased purchases of computer monitors, home theaters and appliances for years during the Covid pandemic. Barry had previously told investors that she expects this fiscal year to see “the trough in technology demand” before buying picks up again.
For the three-month period ended Oct. 28, net income fell to $263 million, or $1.21 per share, according to Best Buy $277 million, or $1.22 per share, in the same period last year. Sales fell from $10.59 billion the previous year.
Comparable sales, an industry measure that includes sales online and in stores open at least 14 months, fell 6.9% year-over-year and 7.3% in the U.S. as shoppers bought fewer gadgets, computers, home theaters and Bought cell phones. The company said it was seeing revenue growth in gaming.
The company’s online sales fell 9.3% in the United States
Even as demand for goods declined, Best Buy increased profitability because it made money from its annual membership program, sold products with lower margins, and had lower supply chain costs.
Best Buy shares closed at $68.11 on Monday. So far this year, the company’s shares have fallen about 15%, lagging the S&P 500’s 18% gains over the same period.
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