Best Buy tops Street; expects this year to be ‘low point’ in tech demand
Best Buy reported better-than-expected second-quarter earnings and sales but provided a mixed outlook for the year amid the continuing spending pull back on appliances, computers and other electronics.
In a statement, CEO Corrie Barry said that the company still anticipates that that this year will be “the low point” in tech demand after two years of sales declines.
“Next year the consumer electronics industry should see stabilization and possibly growth driven by the natural upgrade and replacement cycles and the normalization of tech innovation,” she said.
On the company earnings call, Barry said the company is on track with its 2023 brick-and-mortar plans. It plans to close 20 to 30 larger-format stores, remodel eight stores to its “experience” format and expand its outlet store format from 19 locations to about 25.
Best Buy’s net income fell to $274 million, or $1.25 a share, for the quarter ended July 29, from $306 million, or $1.35 a share, in the year-ago period. Adjusted earnings per share of $1.22 easily topped analysts’ estimates of $1.06.
Revenue fell 7.2% to $9.58 billion, beating estimates of $9.52 billion. Same-store sales declined 6.2%.
Domestic revenue of $8.89 billion decreased 7.1% versus last year primarily driven by a comparable sales decline of 6.3%. From a merchandising perspective, the largest drivers of the comp sales decline were appliances, home theater, computing and mobile phones, which were partially offset by growth in gaming.
“Our financial results were better than expected, and they reflect a consumer electronics industry that remains challenged due to the pull forward of demand in prior years and the various macroeconomic factors that we are all too familiar with,” stated Barry.
Best Buy lowered its fiscal 2024 guidance for revenue to $43.8 billion to $44.5 billion from its previous range of $43.8 billion to $45.2 billion. It expects same-store sales declines of 4.5% to 6.0%, down from 3.0% to 6.0%. It increased its adjusted EPS outlook to $6.00 to $6.40 from $5.70 to $6.50.
In May, we noted that we were preparing for a number of scenarios within our annual guidance range, and we believed our sales were aligning closer to the midpoint of the annual comparable sales guidance,” said Matt Bilunas, Best Buy CFO. “Today we are lowering the high-end of our full year revenue outlook to our previous midpoint, while keeping the low-end of our revenue guidance unchanged. At the same time, we are narrowing our profitability ranges, effectively raising the midpoint of our previous annual guidance for non-GAAP operating income rate and non-GAAP diluted EPS.”