Best Buy lowers its quarterly sales forecast after consumer electronics demand is weaker than expected. The company has expected a yearly revenue of $41.1 billion to $41.5 billion instead of earlier forecasts of between $41.3 billion and $41.9 billion. For this reason, it also states that Best Buy forecasted the decline in its comparable sales by 2.5% to 3.5%, which is a more severe cut than what had initially been estimated by the company that will stand at a 1.5% to 3% drop. More relatedly, comparable sales would also refer to sales transactions that are either conducted over the internet or processed in those stores that have been around for more than 14 months.
Best Buy said that net income for the fiscal third quarter rose slightly to $273 million, or $1.26 a share, from $263 million, or $1.21 a share, in the same period last year. Net sales declined to $9.45 billion, from the year-earlier total of $9.76 billion, and missed analysts’ forecasts of $9.63 billion. Adjusted earnings per share also $1.26 were less than analysts’ estimates of $1.29.
CEO Corie Barry said the sales slowdown was partly due to macroeconomic uncertainty, customer hesitation ahead of the expected sales events, and election cycle distractions. Though demand has begun to rebound during the latter part of the holiday season, Best Buy remains conservative, expecting comparable sales for the fiscal fourth quarter to come in between flat and down 3%.
The retailer is experiencing multiple difficulties, including a short holiday shopping season. Compared with earlier periods, five days fewer are available for holidays to make sales. Barry noted that shoppers are responding to larger sales events like Black Friday and Cyber Monday, but sales outside these peak periods are lower than anticipated.
Best Buy also is competing with longer-run trends, including the post-Covid slowdown in discretionary spend and a shift toward travel and dining services. While the corporation was hoping that new releases such as AI-enabled laptops and the latest iPhone models might offset the decline, such efforts were not enough. Notably, sales of appliances, home theater systems, and gaming products were weaker, although computing, tablet, and services categories saw growth.
Despite these headwinds, Best Buy remains focused on stabilizing the industry and continues to anticipate that demand for upgraded devices, such as new iPads and AI-enabled phones, will drive future growth.
