NEW YORK, NY – Best Buy announced on Tuesday that it is lowering its sales outlook for the full year, in anticipation of subdued customer demand and increased price sensitivity during the holiday season.
The consumer electronics giant exceeded Wall Street’s earnings expectations for the quarter, but fell short in terms of revenue. As a result, Best Buy is revising its full-year revenue projections to a range of $43.1 billion to $43.7 billion, down from the initial estimate of $43.8 billion to $44.5 billion. The company also expects a decline in comparable sales by 6% to 7.5%, compared to the previous guidance of a 4.5% to 6% drop.
CEO Corie Barry cited an economic environment marked by high inflation and the Federal Reserve’s efforts to curb spending as contributing factors to the unsteady and difficult-to-predict consumer demand. She stated that the company is well-prepared for the upcoming holiday season and is set to cater to budget-conscious customers with attractive promotions and deals.
In terms of performance, Best Buy reported adjusted earnings per share of $1.29, surpassing the expected $1.18, but revenue fell short at $9.76 billion, below the expected $9.90 billion.
Notably, Best Buy, much like home improvement retailers, is experiencing a moderation in demand following a surge in purchases of electronics and appliances during the pandemic. With a decline in net income and revenue compared to the same period last year, the company also saw a decrease in comparable sales, particularly in the U.S.
Despite the decrease in demand for merchandise, Best Buy was able to achieve higher profitability through its membership program, products with better profit margins, and lower supply-chain costs. However, the company’s stock has seen a 15% decline in value so far this year, underperforming the broader market.
In summary, Best Buy’s revised sales outlook and lower revenue expectations reflect the challenges of navigating subdued consumer demand and heightened price sensitivity during the holiday season. Despite exceeding earnings expectations and implementing strategies to drive profitability, the company’s performance has faced headwinds in the face of shifting consumer preferences.