People walk past a Best Buy store in Manhattan on November 22, 2021 in New York City.
Andrew Kelly | Reuters
Best Buy cut its full-year sales outlook on Tuesday as the company faces a period of cooling demand and prepares for pricey holiday shoppers.
The consumer electronics retailer beat Wall Street’s quarterly earnings expectations but fell short on revenue.
Best Buy expects revenue of $43.1 billion to $43.7 billion for the fiscal year, down from its previous range of $43.8 billion to $44.5 billion. The retailer said it expects comparable sales to fall 6% to 7.5%, rather than its previous guidance of a 4.5% to 6% decline.
It also cut the high end of its profit guidance, expecting adjusted earnings per share to be between $6 and $6.30, instead of $6 and $6.40.
CEO Corey Barry said in a news release that Best Buy expects soft consumer electronics sales this year. But with an economic backdrop marked by high inflation and a Federal Reserve campaign, consumer demand “remains uneven and difficult to predict,” he said.
He said the retailer is ready for the holiday season and is “ready for a customer who is more focused on promotions and deals for all budgets.”
Here’s how the company performed in the fiscal third quarter compared to Wall Street’s expectations, based on a survey of analysts at LSEG, formerly Refinitiv:
- Earnings per share: $1.29 adjusted and $1.18 expected
- Revenue: $9.76 billion vs. $9.90 billion expected
Best Buy, like other home improvement retailers, saw demand moderate following a spike in purchases of computer monitors, home theaters and appliances during the Covid pandemic. Barry previously told investors he expected this fiscal year to be a “low point in technical demand” before purchases pick up again.
For the three months ended Oct. 28, Best Buy’s net income fell to $263 million, or $1.21 per share. $277 million, or $1.22 per share, During the previous year. Revenues fell from $10.59 billion in the previous year.
Comparable sales, an industry measure 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 sales growth in gaming.
The company’s online sales in the US fell 9.3%
Despite seeing lower demand for merchandise, Best Buy was more profitable because it made money from its annual membership program, sold products with favorable margins and had lower supply chain costs.
Shares of Best Buy closed at $68.11 on Monday. So far this year, the company’s shares have fallen about 15%, less than the S&P 500’s 18% gains over the same period.
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