Best Buy on Thursday topped Wall Street’s quarterly earnings expectations, but its sales missed estimates and it reiterated expectations for weaker spending on consumer electronics this year.
The company’s shares rose more than 2% in early trading Thursday.
The retailer affirmed the outlook it shared in March. It expects full-year revenue of between $43.8 billion and $45.2 billion, a decline from its most recent fiscal year, and a comparable sales drop of between 3% and 6%.
On a call with analysts, CEO Corie Barry said as shoppers face higher prices for housing, food and fuel, they are making trade-offs by buying some items and skipping others.
“We’ve been seeing a consumer who is — whether or not you call it a recession — exhibiting some recessionary behaviors,” she said.
But Barry said the Minnesota-based retailer expects the calendar year to be “the bottom for the decline in tech demand.” She said sales will bounce back because households now have far more connected devices than pre-pandemic. The debut of innovative products and the aging of items that customers have at home will spark replacements or new purchases, too, she said.
Here’s how the company did for the three-month period that ended April 29, compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $1.15 adjusted vs. $1.11 expected
- Revenue: $9.47 billion vs. $9.52 billion expected
Best Buy is the latest retailer to share an update on the American consumer. Over the past week, numerous retailers, including Walmart, Target and Home Depot, have spoken about more price-sensitive shoppers who aren’t as willing to spend on big-ticket or discretionary items — particularly compared with the stimulus check-fueled years of the Covid pandemic.
As a consumer electronics retailer, Best Buy is more vulnerable to that pullback since many of the items it sells come with a higher price tag and are not replaced frequently.
Best Buy’s net income for the first quarter fell to $244 million, or $1.11 per share, from $341 million, or $1.49 per share, a year earlier.
Net sales in the quarter declined to $9.47 billion, down 11% from $10.65 billion in the year-ago period, and fell short of Wall Street’s expectations.
Comparable sales declined 10.1% in the quarter, in line with the drop expected by investors, according to StreetAccount.
Barry said on the analyst call that customers are “clearly feeling cautious and making trade-off decisions as they continue to deal with high inflation and low consumer confidence due to a number of factors.”
Yet so far, Best Buy’s customer demographics and the percentage of premium products they purchase has remained about the same, she said.
Best Buy has looked for other ways to make money when people aren’t buying as many TVs, smartphones or home theater systems. Earlier this year, it struck a deal with Atrium Health, a North Carolina-based health-care system, to sell devices and handle installation for a program that allows patients to get hospital care at home. It recently relaunched its membership program, My Best Buy, which charges a subscription fee and includes features like tech support, extended returns and early access to hot products.
Best Buy also laid off hundreds of store employees in April. The retailer declined to specify the number, but said it will add workers in growing areas such as its membership program and health business.
The company’s employee count has shrunk over the years. As of the end of January, Best Buy had more than 90,000 employees in the U.S. and Canada. That’s down from the nearly 125,000 workers that it had in early 2020, according to company financial filings.
Shares of Best Buy closed Wednesday at $69.15, bringing the company’s market value to $15.12 billion. So far this year, its stock is down about 14%, trailing the 7% gains of the S&P 500 and the 2% declines of the retail-focused XRT during the same period.