March 6, 2023: On Thursday, Best Buy reported holiday-quarter profits and revenue that topped Wall Street’s anticipations, as waning demand for consumer electronics was not as bad as feared.
Still, shares decreased by 4% in early trading as the retailer warned of decreasing sales in the coming year.
For the coming financial year, the consumer electronics retailer anticipates revenue amid $43.8 billion and $45.2 billion, a decline from its latest fiscal year and a same-store sales decline between 3% and 6%. The company expects to feel most of that pressure in the first quarter and then level out in the second half of the financial year.
“We are preparing for one more down year for the industry,” the CEO Corie Barry stated.
Best Buy was a huge beneficiary of sales trends in the Covid pandemic as consumers bought computer monitors to work remotely, home theatres to pass the time and kitchen devices to cook more. Its quarterly sales were down by 3% from a similar period before the pandemic when it stated $15.2 billion in revenue.
Its pandemic-era momentum has teed up challenging mixing for the consumer electronics retailer, especially as shoppers feel strained by more enormous grocery bills and other higher expenses fueled by inflation. Best Buy also sells many big-ticket items, such as laptops and smartphones, purchases that customers may make less frequently or postpone if other spending priorities stretch them.
Same-store sales are coming down by 9.3% during the fourth quarter, slightly higher than analysts’ anticipations of 9.2%, according to StreetAccount. For the year, same-store sales were down 9.9%, in line with the retailer’s guidance in November that same-store sales would come down about 10%. The critical metric, comparable sales, tracks sales online and at stores open for at least 14 months.
Best Buy had joined other retailers in slashing its outlook this summer. It also cut an undisclosed amount of jobs across the country this summer.
In the fourth quarter, Best Buy’s net income decreased 21% to $495 million, or $2.23 for each share, from $626 million, or $2.62 per share, before a year.
As of Wednesday’s close, Best Buy’s shares have risen nearly 3% this year, in line with the S&P 500 at the same time. Its shares closed at $82.54 on Wednesday, bringing its market value to $18.26 billion.