Best Buy joins the growing list of retailers reporting slower sales and hard-to-control expenses this quarter. But the electronics retailer is anything but gloomy about the months ahead.
Acknowledging that comparable sales, which declined 8%, were softer than anticipated, the retailer lowered its forecasts to a comparable decrease of between 3% and 6% for the full fiscal year.
Yet it says it is a fundamentally stronger company now than before the pandemic, and that investments in workforce, flexible retail space, connected health and its TotalTech membership program leave it in excellent shape.
“We firmly believe that technology is more relevant today than ever,” said Corie Barry, Best Buy’s CEO, in a call detailing the results for investors. “Every aspect of our lives has changed with technology, and we uniquely know how to make it human in our customers’ homes, and right for their lives.”
Total revenue for the Minneapolis company dropped to $10.64 billion, from $11.64 billion in the comparable period of the prior year. Net earnings fell to $341 million from $595 million, in line with expectations.
Barry said that shifting macroeconomic trends continue to depress results in the current quarter. “Clearly, there remains a great deal of uncertainty,” she noted. “On one hand, consumers still have a relatively strong balance sheet, and they continue to spend. Wages are up. unemployment is at record lows.”
But the macroeconomic pressures are real. Without last year’s stimulus income, many consumers are “facing higher gas and food prices, rising interest and mortgage rates, recession fears, stock market volatility and geopolitical uncertainty stemming from the war in Ukraine,” she said.
“Underlying all that is the gradual shifting of spend from the stay-at-home purchases to more experiential spend.”
Describing the results as “better than feared,” Wedbush Securities analyst Seth Basham continues to rate Best Buy as neutral. He writes it still faces some risks.
He says the company is managing well in a challenging environment, but it has to confront “continued -- if not mounting -- pressures on discretionary home-oriented spending for the mass consumer.”