Best Buy broadly misses earnings estimates as consumers pull back on appliances, electronics
Even artificial intelligence couldn’t make up for flagging consumer demand at Best Buy (BBY).
For the twelfth consecutive quarter, the retailer posted negative same-store sales growth, down 2.9% year over year versus estimates of down 0.92%. Net sales of $9.45 billion and adjusted earnings per share of $1.26 also missed expectation of $9.63 billion and $1.29 per share, respectively.
CEO Corie Barry attributed the miss to “a combination of overall ongoing macro uncertainty, customers waiting for deals and sales, and distraction during the run-up to the election, particularly in nonessential categories” in the earnings call.
In the quarter, appliance and entertainment sales dropped 14.70% and 18.80%, respectively, compared to estimates of down 7.5% and 4%. Consumer electronics sales declined 5.8%.
Computing and mobile phones saw a gain in sales, up 3.80%, while services revenue was up 6%, both slightly beating estimates.
The company expects same-store sales growth for the fourth quarter to be flat to down 3%, slashing optimistic views that demand was stabilizing post pandemic.
“Fourth quarter sales is a sequential improvement,” Barry told reporters in a media call, “We like what we’re seeing early in the holiday, a little bit better than our expectations.”
This year, the company kicked off Black Friday sales a week earlier as consumers hunt for value.
Shares of Best Buy are down 7% in pre-market trading. As of Monday at market close, shares were up nearly 19% year to date, trailing behind the S&P 500’s (^GSPC) 25% gain.
Here’s what Best Buy to posted for the third quarter, compared to Bloomberg consensus data estimates:
Adjusted earnings per share: $1.26 versus $1.29
Net sales: $9.45 billion versus $9.63 billion
Same-store sales growth overall: -2.9% versus -0.92%
Total US same-store sales growth: -2.8% versus versus -1.04%
Sales growth for:
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Appliances: -14.7% versus -7.50%
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Entertainment: -18.8% versus -4%
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Consumer electronics: -5.8% versus -2.72%
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Computing and mobile phones: +3.8% versus +3.5%
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Services: +6% versus +5.83%
International: -3.7% versus -0.57%
The company updated its full-year outlook. Same-store sales are projected to decline 3.5% to 2.5%. That’s compared to previously expected decline of 3% to 1.5%.
Revenue for the year is projected at $41.1 billion to $41.5 billion, lower than the previous range of $41.3 billion and $41.9 billion.
Earnings per share is updated to $6.10 and $6.25, compared to a previous range of $6.10 and $6.35.
Barry said the company is at a turning point as “layers of pressures that have been on the business” like inflation, the housing market, consumers spending on experiences, and lack of new products start to change.
