People walk into the Best Buy store at Brooklyn Mall on August 29, 2023 in New York City.
Spencer Pratt | Getty Images
best buy It cut its full-year sales forecast on Tuesday as the company missed Wall Street’s quarterly revenue forecasts and a new batch of iPhones and artificial intelligence-enabled laptops were not enough to drive higher sales.
The consumer electronics retailer said it now expects full-year revenue of $41.1 billion to $41.5 billion, compared with previous guidance of $41.3 billion to $41.9 billion. The company expects full-year comparable sales to fall 2.5% to 3.5%, compared with its previous forecast of a 1.5% to 3% decline. Comparable sales include online sales and sales at stores open for at least 14 months.
Best Buy shares fell about 3% in premarket trading Tuesday.
In the company’s earnings report, Chief Executive Corie Barry said the company was seeing “lower than expected demand.” She attributed this to “ongoing macro uncertainty, customers waiting for deals and sales events and distractions in the run-up to the election, particularly in the discretionary category.”
But she added that in the first few weeks of the season, consumer demand picked up again as holiday sales gained momentum and election concerns eased.
“We continue to see consumers looking for value and sales activity, and are also willing to spend money on higher-priced products when they need it or when new, compelling technology emerges,” she said in the release. “As a result, we are looking for Balancing our optimism about the industry with our unique positioning and taking a pragmatic approach to countering potential imbalances in customer behavior going forward.”
Here’s how the retailer’s third-quarter earnings compared with Wall Street expectations, according to a survey of analysts by London Stock Exchange Group (LSEG):
- Earnings per share: Adjusted $1.26 Estimated $1.29
- income: US$9.45 billion, expected US$9.63 billion
During the three months ended November 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 ago.
Net sales fell to $9.45 billion from $9.76 billion in the same period last year.
After about two years of declining sales in the consumer electronics category, Best Buy is waiting for a wave of shoppers to replace older devices and upgrade to new, higher-tech ones. A variety of factors weighed on the retailer’s sales, including a surge in purchases of items such as laptops, home theater systems and kitchen appliances during the coronavirus pandemic; and as Americans spend more on food and other necessities due to inflation. Reduced discretionary purchases; and a redirection to spending on services, including travel and dining out.
Over the past few quarters, Chief Executive Officer Barry and Chief Financial Officer Matt Birunas have said they expected this year to bring “increased industry stability.” Barry also talked about Best Buy’s expectations for new products, including Apple’s fresh Collection of iPads and laptops that support artificial intelligence from microsoftwill drive sales.
However, the debut of these devices wasn’t enough to significantly boost Best Buy’s quarterly results. Comparable sales fell 2.9% across the business segment, with U.S. comparable sales down 2.8%
Best Buy said comparable sales fell on weaker sales of appliances, home theater and games, partially offset by growth in computers, tablets and services categories. The company provides services such as installing technology in customers’ homes.
Digital sales in the U.S. were also weak, down 1% year-on-year
As of Monday’s close, Best Buy shares were up about 19% so far this year. That’s lower than the S&P 500’s gain of about 26% over the same period. Best Buy closed at $93.03 on Monday, giving it a market capitalization of $19.98 billion.
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