People walk past a Best Buy store in Manhattan, New York City, November 22, 2021.
Andrew Kelly | Reuters
Best Buy cut its full-year sales outlook on Tuesday, as the company recovers from a period of cooler demand and prepares for price-conscious holiday shoppers.
The consumer electronics retailer beat Wall Street’s quarterly earnings expectations, but revenue fell short.
Best Buy said it now expects revenue to be between $43.1 billion and $43.7 billion for the fiscal year, down from its previous range of between $43.8 billion and $44.5 billion. The retailer said it expects comparable sales to decline between 6% and 7.5%, below its previous guidance of a 4.5% to 6% drop.
He also lowered the top end of his profit guidance, saying he 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 expected softer sales of consumer electronics this year. But with an economic backdrop marked by high inflation and the Federal Reserve’s drive to cool spending, she said consumer demand “has become even more uneven and harder to predict.”
She said the retailer is ready for the holiday season and “prepared for a customer who is very focused on promotions and deals for every budget.”
Here’s how the company did for the fiscal third quarter, compared to Wall Street expectations, based on a survey of analysts by LSEG, formerly Refinitiv:
- Earnings per share: $1.29 adjusted versus $1.18 expected
- Revenue: $9.76 billion vs $9.90 billion expected
Best Buy, as a home improvement retailer, is seeing moderate demand as it follows years of increased purchases of computer monitors, home theaters, and appliances due to the Covid pandemic. Barry previously told investors that she expected this fiscal year to be “the low point in technical demand” before buying picks up again.
In the three months ended Oct. 28, Best Buy said net income fell to $263 million, or $1.21 per share, from $277 million, or $1.22 per share, in the period a year ago. Income fell from $10.59 billion a year ago.
Comparable sales, an industry metric that includes sales online and at stores open at least 14 months, fell 6.9% year over year and 7.3% in the U.S., as shoppers bought fewer appliances, computers, home theaters and mobile phones. The company said it saw growth in sales in games.
The company’s online sales declined 9.3% in the US
Even as it saw lower demand for products, Best Buy drove higher profits because it made money from its annual membership program, sold products with better margins and had lower supply chain costs .
Best Buy shares closed at $68.11 on Monday. So far this year, the company’s stock has fallen about 15%, underperforming the S&P 500’s 18% gain over the same period.
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