A Best Buy store in Woodbridge, Virginia, on May 21, 2024.
Nathan Howard | Bloomberg | Getty Images
Best Buy on Tuesday cut its full-year sales forecast as it missed Wall Street’s quarterly revenue expectations and a fresh batch of iPhones and AI-enabled laptops weren’t enough to drive higher sales.
The consumer electronics retailer said it now expects full-year revenue to range from $41.1 billion to $41.5 billion, compared to prior guidance of $41.3 billion to $41.9 billion. It expects full-year comparable sales to decline by between 2.5% and 3.5%, compared to its prior expectations of a 1.5% to 3% drop. Comparable sales includes sales online and at stores open for at least 14 months.
Shares of Best Buy fell 7% in premarket trading Tuesday.
In the company’s earnings release, CEO Corie Barry said it saw “softer-than-expected demand.” She pinned that on “a combination of the ongoing macro uncertainty, customers waiting for deals and sales events, and distraction during the run-up to the election, particularly in non-essential categories.”
But, she added, in the first weeks of the current quarter, consumer demand has picked up again as holiday sales gain momentum and election concerns ease.
“We continue to see a consumer who is seeking value and sales events, and one who is also willing to spend on high price-point products when they need to or when there is new, compelling technology,” she said in the release. “Thus, we are balancing our optimism in both the industry and our unique positioning with a pragmatic approach to likely uneven customer behavior going forward.”
Here’s what the retailer reported for its fiscal third quarter, compared with what Wall Street expected, according to a survey of analysts by LSEG:
- Earnings per share: $1.26 adjusted vs. $1.29 expected
- Revenue: $9.45 billion vs. $9.63 billion expected
In the three-month period that ended Nov. 2, Best Buy’s net income rose to $273 million, or $1.26 per share, from $263 million, or $1.21 per share, a year earlier.
Net sales fell to $9.45 billion from $9.76 billion in the year-ago quarter.
Best Buy is waiting for a wave of shoppers to replace old devices and upgrade to new, higher-tech ones after an approximately two-year sales slump in the consumer electronics category. A mix of factors have dragged down the retailer’s sales, including the spike in purchases of items like laptops, home theater systems and kitchen appliances during the Covid pandemic; the pullback in discretionary purchases as Americans spent more on food and other necessities due to inflation; and the shift back to spending on services, including travel and dining out.
Over the past few quarters, CEO Barry and CFO Matt Bilunas have said they anticipate this year to be one that brings “increasing industry stabilization.” Barry has also spoken about Best Buy’s anticipation that new gadgets, including Apple’s fresh collection of iPads as well as artificial intelligence-enabled laptops from Microsoft, will drive sales.
Yet the debut of those devices wasn’t enough to meaningfully lift Best Buy’s quarter. Comparable sales declined by 2.9% across the business and by 2.8% in the U.S.
Best Buy said weakness in sales of appliances, home theaters and gaming contributed to the comparable sales decline, but was offset in part by growth of computing, tablets and sales in the services category. The company offers services, such as installing tech in customers’ homes.
Digital sales were also soft, decreasing 1% year over year in the U.S.
As of Monday’s close, shares of Best Buy are up about 19% so far this year. That’s less than the S&P 500’s approximately 26% gains during the same period. Best Buy closed on Monday at $93.03, bringing its market value to $19.98 billion.
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