Highlights
- Best Buy’s earnings exceeded expectations, but sales did not meet estimates.
- The company maintains its forecast of weaker consumer electronics spending.
- Best Buy’s net income and comparable sales declined in the first quarter.
Overview
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 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 decline of between 3% and 6%.
Shares rose more than 4% in premarket trading.
Customers Cautious Amidst High Inflation
CEO Corie Barry said Best Buy has not seen a change with its mix of customers and the percentage of premium products that they buy.
Still, she added that “in this environment, customers are clearly feeling cautious and making tradeoff decisions as they continue to deal with high inflation and low consumer confidence due to a number of factors.”
Best Buy Tops Expectations, Misses on Sales
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’s net income in 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 declined 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.
Best Buy Down for Year, Up in Pre-Market Trade
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.
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Best Buy Co Inc reported higher-than-expected quarterly earnings on Tuesday, but sales fell short of Wall Street estimates, sending its shares down 3%.
The consumer electronics retailer, which recently launched a membership program with perks aimed to boost sales, posted a profit of $383 million, or $1.33 per share. This marked a rise of 19% from the same quarter a year ago. Earnings far exceeded analysts’ forecasts of $1.03 per share.
However, the company’s sales of $9.36 billion in the quarter ended May 4, missed expectations of $9.45 billion. Even though total same-store sales increased 1.5%, this was below the 1.8% gain which analysts had forecast.
The company’s domestic same-store sales beat estimates, rising 1.6%. On the other hand, Best Buy’s international same-store sales declined 0.9%.
Chief Executive Officer Hubert Joly said on a conference call that the company’s membership scheme, called Best Buy Beta, made a “solid contribution to our first quarter financial performance”. The company has previously said that the program could bring in $1.5 billion in revenue in its first year.
Joly also attributed the company’s success to its strong online presence. This includes investments in capabilities such as using artificial intelligence to suggest “highly personalized” products.
“We are continuing to invest carefully and appropriately to ensure that we are fully positioned to capitalize on the potential of the industry shift to online,” Joly said.
Best Buy recently revealed plans to hike its store operating costs for the full year. The company also announced an $18 billion stock buyback plan.
Overall, Best Buy posted strong earnings in the first quarter, however, sales were slightly weaker than expected. Despite this, shares of the company are up almost 7% this year.
