People walk past a Best Buy store in Manhattan, New York City, November 22, 2021.
Andrew Kelly | Reuters
Best Buy on Tuesday it lowered its full-year sales outlook as the company weathers a period of cooler demand and prepares for price-conscious holidaymakers.
The consumer electronics retailer exceeded Wall Street’s quarterly expectations, but lagged on revenue.
Best Buy now expects fiscal year revenue to range from $43.1 billion to $43.7 billion, down from the previous range of $43.8 billion to $44.5 billion. The retailer expects comparable sales to decline 6% to 7.5%, which is lower than its previous expectation of a decline of 4.5% to 6%.
It also lowered the top end of its earnings forecast, saying it expects adjusted earnings per share to range from $6 to $6.30 instead of between $6 and $6.40.
CEO Corie Barry said in a press release that Best Buy expects weaker consumer electronics sales this year. But with an economic backdrop marked by high inflation and the Federal Reserve’s campaign to cool spending, she said consumer demand is “even more uneven and harder to predict.”
She said the retailer is ready for the holidays and “prepared for a customer who is very deal-oriented with promotions and deals for every budget.”
Here’s how the company did for the fiscal third quarter, compared to what Wall Street expected, based on a survey of analysts by LSEG, formerly known as Refinitiv:
- Earnings per share: $1.29 adjusted versus $1.18 expected
- Revenue: $9.76 billion versus $9.90 billion expected
Best Buy, like home improvement retailers, is seeing muted demand due to years of increased purchases of computer monitors, home theaters and appliances during the Covid pandemic. Barry previously told investors she expected this fiscal year to be “the trough in technology demand” before buying picks up again.
In the three-month period ending Oct. 28, Best Buy said net income fell from $263 million to $263 million, or $1.21 per share. $277 million, or $1.22 per share, in the period of one year ago. Turnover fell from $10.59 billion a year earlier.
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 consumers purchase fewer devices, computers, home theaters and mobile bought phones. The company said it saw revenue growth in gaming.
The company’s online sales fell 9.3% in the US
Even when there was lower demand for goods, Best Buy delivered higher profitability because it monetized its annual membership program, sold products at more favorable margins and had lower supply chain costs.
Best Buy shares closed Monday at $68.11. So far this year, the company’s shares are down about 15%, underperforming the S&P 500’s 18% gain over the same period.
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