Best Buy, the consumer electronics retailer, has revised its full-year sales outlook, citing a period of softer demand and the anticipation of price-conscious holiday shoppers. Although the company surpassed Wall Street’s expectations for quarterly earnings, its revenue fell short.
The revised projection for Best Buy’s fiscal year revenue is now expected to range between $43.1 billion and $43.7 billion, down from the previous projection of $43.8 billion to $44.5 billion. The retailer also adjusted its forecast for comparable sales, expecting a decline between 6% and 7.5%, compared to the previous guidance of a 4.5% to 6% drop. Additionally, the high end of the profit guidance was lowered, with adjusted earnings per share now projected to range from $6 to $6.30, instead of the previously expected range of $6 to $6.40.
CEO Corie Barry acknowledged that Best Buy had anticipated weaker sales of consumer electronics this year but described the consumer demand as even more unpredictable and uneven than expected, against a backdrop of high inflation and efforts by the Federal Reserve to curb spending. The company is now prepared for the holiday season, focusing on deals and promotions to cater to price-sensitive customers across all budgets.
In the fiscal third quarter, Best Buy reported adjusted earnings per share of $1.29, surpassing the expected $1.18, while its revenue amounted to $9.76 billion, slightly lower than the expected $9.90 billion. The decline in demand for consumer electronics during the Covid-19 pandemic has affected Best Buy, as well as home improvement retailers, resulting in moderating demand for computer monitors, home theaters, and appliances. However, the company aims to bounce back as it anticipates an upswing in tech demand in the coming years.
Best Buy’s net income for the three-month period ending on October 28 amounted to $263 million, with revenue falling from $10.59 billion during the same period the previous year. Comparable sales, including both online and in-store sales, dropped by 6.9% year over year and 7.3% in the United States. The company did observe sales growth in the gaming category but experienced a decline of 9.3% in online sales within the U.S., despite the overall increase in profitability due to its membership program and favorable product margins.
Despite these challenges, Best Buy remains optimistic and committed to meeting the expectations of its customers during this holiday season and beyond.
1. What is Best Buy’s revised full-year sales outlook?
Best Buy now expects its fiscal year revenue to range between $43.1 billion and $43.7 billion, down from the previous projection of $43.8 billion to $44.5 billion.
2. How much decline in comparable sales is Best Buy expecting?
Best Buy is expecting a decline between 6% and 7.5% in comparable sales, lower than the previously anticipated drop of 4.5% to 6%.
3. What is the reason for Best Buy’s lower sales outlook?
Best Buy attributes its lower sales outlook to cooler demand and the expectation of price-conscious holiday shoppers.
4. How did Best Buy perform in the fiscal third quarter?
Best Buy surpassed Wall Street’s expectations for quarterly earnings, reporting adjusted earnings per share of $1.29, compared to the expected $1.18. However, its revenue of $9.76 billion fell slightly short of the expected $9.90 billion.
5. How has the Covid-19 pandemic affected Best Buy’s business?
Best Buy, like other consumer electronics and home improvement retailers, has experienced moderating demand for products such as computer monitors, home theaters, and appliances due to the pandemic.