MINNEAPOLIS — Minnesota-based Best Buy reported declines in fiscal first-quarter sales and profits as the nation's largest consumer electronics chain continues to wrestle with a consumer spending slowdown in gadgets.
However, the company's earnings beat Wall Street expectations even as sales were below expectations. Best Buy, based in Minneapolis, affirmed its cautious financial outlook, underscoring continued uncertainty about the broader economic environment and the outlook for consumer electronics spending.
Shares rose more than 4% in premarket trading on Thursday.
Best Buy’s sales during the depths of the pandemic were fueled by oversized spending by Americans who splurged on gadgets to help them work from home or help their children with virtual learning. Government stimulus checks drove a lot of that spending. But last year, consumers began to pull back from items that were popular during the pandemic like TVs and casual clothing as they became more social. Stubbornly high inflation has also made shoppers more selective about buying gadgets and other items.
“In this environment, customers are clearly feeling cautious and making trade-off decisions as they continue to deal with high inflation and low consumer confidence due to a number of factors,” said Best Buy's CEO Corie Barry in a statement. “At the same time, in the first quarter, we continued to see our purchasing customer behavior remain relatively consistent in terms of demographics and the percentage of purchases categorized as premium.”
As gadget spending remains tough, Best Buy is rolling out a three-tiered membership program next month, including a lower-price option costing less than $50 per year, tailored to the different needs of shoppers.
Best Buy said that it earned $244 million, or $1.11 per share, for the three-month period ended April 30. That compares with $341 million, or $1.49 per share, in the year-ago period. Analysts were expecting $1.10 per share.
Revenue slipped 11% to $9.47 billion from $10.65 billion in the year-ago period. That was below analysts expectation for $9.53 billion.
Comparable sales — a key metric of a retailer's health — were down 10.1% in the quarter.
Best Buy said it expects earnings per share in the range of $5.70 to $6.50 for the year. Analysts expect $6.17 per share, according to FactSet.
It projects revenue of $43.8 billion to $45.2 billion for the year. Analysts expect $44.5 billion, according to FactSet. It also anticipates comparable sales to fall 3% to 6% for the year.
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