Best Buy sales fall, but not as much as expected on Wall Street

Customers shop at a Best Buy store on August 24, 2021 in Chicago, Illinois. Best Buy saw a nearly 20% increase in sales in the second quarter as consumers purchased electronics to accommodate lifestyle changes related to the ongoing pandemic.

Scott Olson | Getty Images

Best Buy beat Wall Street’s revenue estimates for the fiscal first quarter even as customers faced high levels of inflation and the company outpaced a year-ago period fueled by the stimulus of Covid.

The shares were roughly flat in premarket trading after rising about 9% earlier.

Here’s how the retailer fared in the three months to April 30 compared to what Wall Street expected, according to a Refinitiv analyst survey:

  • Earnings per share: $1.57 adjusted vs. $1.61 expected
  • Revenue: $10.65 billion vs. $10.41 billion expected

Best Buy’s first-quarter net income fell to $341 million, or $1.49 per share, from $595 million, or $2.32 per share, a year earlier. Excluding items, it earned an adjusted $1.61 per share.

Net sales fell to $10.41 billion from $11.64 billion a year earlier.

Best Buy’s same-store sales fell 8% from the year-ago period, better than the 8.6% decline analysts expected, according to FactSet.

Investors scoured retail earnings for signs of the health of the US consumer with inflation at its highest level in four decades. With Best Buy, some feared the company was particularly vulnerable to a pullback. It faced tough comparisons with a quarter a year ago of pandemic-fueled demand for home theaters, computer monitors and kitchen appliances. This boosted same-store sales by 37.3%.

Best Buy also told Wall Street at an Investor Day in March that sales would be weaker after two years of very high demand. However, chief financial officer Matt Bilunas said the company ultimately forecast demand to exceed pre-pandemic sales over the next few years.

Heightened investor concerns at Walmart and Target last week. Both big-box retailers posted sales growth in the first fiscal quarter but fell short of Wall Street’s profit expectations as fuel and freight costs soared and consumer demand for higher-margin discretionary purchases fell. In particular, Target CEO Brian Cornell said customers skipped over bulky items like TVs and kitchen appliances — merchandise that Best Buy also sells.

Retailer results contributed to a sell-off on Wall Street last week, which dragged Best Buy’s stock to a 52-week low on Friday.

Those muted expectations likely set the stage for Wall Street’s positive reaction to Best Buy on Tuesday morning, even as the retailer cut its forecast and warned of tougher times ahead.

Best Buy said it now expects annual revenue of between $48.3 billion and $49.9 billion, down from an earlier outlook of $49.3 billion to $50.8 billion. He said same-store sales would decline between 3% and 6%, a steeper decline than the 1% to 4% decline he had previously anticipated. It expects adjusted earnings per share in the range of $8.40 to $9.00, compared to the previous outlook of $8.85 to $9.15.

CEO Corie Barry said in a press release that the economic backdrop has deteriorated since the company provided guidance at an investor day.

“These trends have continued into the second quarter and as a result we are revising our sales and profitability guidance for the year,” she said.

On Monday, shares rose less than 1% to close at $72.59. Shares of the company are down about 29% so far this year and underperform the S&P 500’s decline of about 17% year-to-date.

This story is developing. Please check for updates.

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