NEW YORK (AP) — Best Buy Co. posted stronger-than-expected profits for the fiscal third quarter but continues to struggle with sales declines as shoppers pull back more on buying gadgets in an uncertain economy.
The nation’s largest consumer electronics chain also cut its annual sales outlook.
Best Buy joins Kohl’s and Lowe’s, which also reported quarterly results on Tuesday that showed weakening consumer spending. Kohl’s posted a bigger-than-expected decline in quarterly sales, as customers spent less at its department stores amid still stubborn inflation. Lowe’s, the nation’s second-largest home improvement chain behind Home Depot, reported drops in both sales and profits. It cut its annual sales outlook as it reported a big customer pullback in do-it-yourself projects.
The job market has remained resilient, but Americans are facing higher prices on many necessities like food and rent, even as the inflation rate is easing overall. And they’re also facing more expensive credit with the Federal Reserve hiking benchmark interest rates to combat inflation. It’s costing more to take out loans for appliances, cars and houses, or to use a credit card. As a result, consumers have become reluctant to spend unless there is a sale.
Best Buy’s and Kohl’s shares were both down nearly 5% in premarket trading. Lowe’s shares declined nearly 4%.
“In the more recent macro environment, consumer demand has been even more uneven and difficult to predict,” said Best Buy’s CEO Corie Barry in a statement.
The Richfield, Minnesota-based company reported fiscal third-quarter net income of $263 million, or $1.21 per share, for the three-month period that ended Oct. 28. That compares with $277 million, or $1.22 per share, in the year-ago period. Earnings, adjusted for non-recurring costs and amortization costs, were $1.29 per share. The average estimate of 13 analysts surveyed by Zacks Investment Research was for earnings of $1.19 per share.
The consumer electronics retailer posted revenue of $9.76 billion in the period, falling short of Street forecasts. Eleven analysts surveyed by Zacks expected $9.88 billion. In the year-ago period, sales were $10.59 billion.
Comparable sales — business coming from its stores and its online channels — fell 6.9% in the quarter.
Best Buy expects full-year earnings in the range of $6 to $6.30 per share, with revenue in the range of $43.1 billion to $43.7 billion. That compares to prior revenue guidance of $43.8 billion to $44.5 billion.
Analysts are expecting $6.19 per share on revenue of $44.14 billion.
It also expects a comparable sales decline of 6% to 7.5% for the year, deeper than the previous guidance of a decline of 4.5% to 6%.
Source: KFGO
