Best Buy, the consumer electronics retailer, has revised its full-year sales outlook, reflecting a period of cooler demand and preparing for price-conscious holiday shoppers. Although the company surpassed quarterly earnings expectations, its revenue fell short.
The revised projected revenue for the fiscal year is expected to range from $43.1 billion to $43.7 billion, compared to the previous range of $43.8 billion to $44.5 billion. Best Buy anticipates a decline in comparable sales by 6% to 7.5%, which is lower than its previous guidance of a 4.5% to 6% drop. Additionally, the retailer adjusted the high end of its profit guidance, with adjusted earnings per share projected to range from $6 to $6.30 instead of $6 to $6.40.
CEO Corie Barry acknowledged the anticipation of softer consumer electronic sales and the challenges of predicting consumer demand in an economic backdrop of high inflation and the Federal Reserve’s efforts to encourage responsible spending. Best Buy is prepared for the holiday season by offering promotions and deals for customers with various budgets.
During the fiscal third quarter, Best Buy reported adjusted earnings per share of $1.29, surpassing the expected $1.18, while revenue reached $9.76 billion, slightly below the projected $9.90 billion.
While demand in sectors like home improvement has moderated post-pandemic, Best Buy expects to experience a recovery in tech demand in the future. The company’s net income for the period ending Oct. 28 decreased from $277 million to $263 million, and revenue dropped from $10.59 billion to $9.76 billion compared to the previous year.
Comparable sales, including online and in-store purchases over a 14-month period, declined by 6.9% year over year and 7.3% in the U.S., primarily due to reduced sales of appliances, computers, home theaters, and mobile phones. However, the company did witness sales growth in the gaming sector. Online sales in the U.S. also declined by 9.3%.
Despite lower demand, Best Buy maintained profitability through its annual membership program, favorable margin sales, and cost-effective supply chain management.
Best Buy’s stock closed at $68.11 on Monday, with a year-to-date decline of approximately 15% compared to the S&P 500’s 18% gain during the same period.
1. Why did Best Buy revise its sales outlook?
Best Buy revised its sales outlook due to cooler demand and the anticipation of price-conscious holiday shoppers.
2. How has Best Buy performed in terms of earnings and revenue?
Best Buy exceeded quarterly earnings expectations but fell short on revenue.
3. What is the revised revenue projection for Best Buy’s fiscal year?
The revised projection ranges from $43.1 billion to $43.7 billion, down from the previous range of $43.8 billion to $44.5 billion.
4. What is the expected decline in comparable sales for Best Buy?
Best Buy expects comparable sales to decline by 6% to 7.5%, lower than the previous guidance of a 4.5% to 6% drop.
5. How did Best Buy’s online sales perform?
Online sales for Best Buy declined by 9.3% in the U.S.