A Best Buy store is seen in Los Angeles, California, USA on March 13, 2017.
Lucy Nicholson | Reuters
Best buy on Tuesday beat Wall Street expectations for quarterly earnings as demand for large consumer electronics held up despite inflation.
Consumer Electronics Dealer, which lowered its forecast this summer, reiterated its outlook for the holiday quarter. It raised its full-year forecast to reflect the pace, saying it expected comparable sales to fall about 10%.
The company’s shares rose more than 7% in premarket trading on Tuesday.
That’s how the retailer performed for the three-month period ending October 29 compared to what Wall Street expected, according to a survey of analysts by Refinitiv:
- Profit per share: Adjusted $1.38 vs $1.03 expected
- income: $10.59 billion versus $10.31 billion expected
While Best Buy’s quarterly results were better than expected, demand is down from the height of the pandemic, when consumers turned to its stores for home theaters, computer monitors, kitchen appliances and more while working, playing and cooking at home.
Net sales for the fiscal third quarter were down approximately 11% from $11.91 billion year-over-year in the third quarter. Net income fell to $277 million, or $1.22 per share, from $499 million, or $2 per share, a year earlier.
CEO Corie Barry said holiday shopping patterns are also shifting to a more typical pre-pandemic pattern. In a press release, she said the retailer expects customers to spend more during Black Friday, Cyber Monday and the two weeks leading up to Christmas.
Best Buy is facing a more uncertain retail environment this holiday season. Some inflation-plagued consumers are pulling back on discretionary items and spending more money on necessities and experiences. The company joined other retailers he’s shortening his outlook this summer. At the time, it said it expected same-store sales to fall about 11% in the 12-month period ending in January.
A month after Best Buy warned of slower sales cut jobs across the country.
Still, the company has so far exceeded its own expectations.
Comparable sales fell 10.4%, less than the 12.9% analysts expected, according to FactSet. A key metric, also called same-store sales, tracks sales online and in stores open for at least 14 months.
It was also less of a drop than the retailer expected. Best Buy did not provide specific guidance for third-quarter comparable sales, but its chief financial officer, Matt Bilunas, warned that it would fall more than 12.1% in the second quarter.
The company said it has resumed share buybacks, which she paused when she withdrew her forecast in July. Best Buy said it plans to spend about $1 billion on share buybacks this year.
Barry said the company is tightly controlling its inventory, which is down 14.7% year over year. Anticipating a drop in demand, the retailer beat a period a year ago when shipments arrived both early and late due to supply chain issues.
Inventory has been a closely watched metric in retail, like many companies deal with an excess of unwanted goods and had to label items, cancel orders, or pack and store goods.
Best Buy shares have fallen about 30% so far this year, underperforming the S&P 500. Shares closed Monday at $70.83, down nearly 2%. The company’s market cap is $15.95 billion.