Best Buy Q2 income, sales fall as consumers pull back in ‘uneven’ sales environment
Best Buy Q2 income, sales fall as consumers pull back in ‘uneven’ sales environment
Best Buy’s second-quarter sales tumbled about 13% amid weaker demand amid inflation and changing spending patterns.
In a statement, CEO Corie Barrie said that company is “clearly operating in an uneven sales environment” that has become even more challenging.
“As we entered the year, we expected the consumer electronics industry to be softer than last year following two years of elevated growth driven by unusually strong demand for technology products and services and fueled partly by stimulus dollars,” she said. “The macro environment has been more challenged due to several factors and that has put additional pressure on our industry.”
The consumer electronics giant’s net income fell to to $306 million, or $1.35 a share, in the quarter ended July 30, from $734 million, or $2.90 a share, in the year-ago period. Adjusted earnings per share came to $1.54, beating analysts’ estimates of $1.27.
Total revenue fell 12.8% to $10.33 billion, topping the $12.27 billion analysts expected. Domestic revenue fell 13.1% to $9.57 billion.
Total comparable store sales decreased 12.1% as the company lapped strong comparable sales growth last year. Domestic comp sales fell 12.7%. From a merchandising perspective, there were comp sales declines across almost all categories, with the largest drivers in computing and home theater.
On the company’s call, Barry said Best Buy has closely managed its merchandise to avoid getting stuck excess goods. At the end of the second quarter, inventory was down 6% compared with the year-ago period.
Best Buy’s domestic online revenue fell 14.7% to $2.97 billion and accounted for 31% of total domestic sales, which was nearly double that of pre-pandemic Q2 of fiscal 2020.
During the quarter, Best Buy opened its first-ever, small-format digitally focused store as part of its test of new store models. The 5,000-sq.-ft. store, in Monroe, N.C., combines a curated selection of Best Buy’s best-in-category products and consultation service areas, including and the retailer’s signature Geek Squad offering.
The company said expects fiscal third-quarter same-store sales to be down "slightly more" than the 12.1% it reported for the second quarter.
“We are focused on balancing our near-term response to difficult conditions and managing well what is in our control, while also delivering on our strategic initiatives and what will be important for our long-term growth,” said Barry. “This includes actively assessing further actions to evolve our operating model, manage profitability and iterate on our growth initiatives. Our strategy, and our confidence in it, remains unchanged. We have exciting opportunities ahead of us in a world that is more reliant on technology than ever. We are a financially strong company with a resilient, world class team that will successfully navigate the current environment.”
Best Buy’s strategy includes focusing on digital -health technology and health-monitoring services. Earlier this month, the company said that, beginning in fall 2022, it will introduce a new "experience" for the hearing impaired that includes over-the-counter hearing devices aimed at customers with mild to moderate hearing loss and an online hearing assessment tool. The move comes after the FDA issued a new rule to improve consumer access to hearing aids, with the goal of lowering costs