Even artificial intelligence couldn’t make it to flag consumer demand at Best Buy (BBY).
For the twelfth consecutive quarter, the retailer posted negative same-store sales growth, down 2.9% year-over-year compared to estimates of 0.92%. Net sales of $9.45 billion and adjusted earnings per share of $1.26 also missed expectations of $9.63 billion and $1.29 per share, respectively.
CEO Corey Barry blamed a combination of “overall ongoing macro uncertainty, customers waiting for deals and sales, and distraction during the election, particularly in non-essential categories,” in the earnings call.
In the quarter, appliance and entertainment sales fell 14.70% and 18.80%, respectively, compared to estimates of 7.5% and 4%. Consumer electronics sales fell 5.8%.
Computing and mobile phones saw sales rise, up 3.80%, while services revenue was up 6%, both narrowly beating estimates.
The company expects same-store sales growth to slow to less than 3% for the fourth quarter, undercutting optimism that demand was stabilizing after the pandemic.
“Fourth quarter sales are a sequential improvement,” Barry told reporters in a media call, adding, “We like what we’re seeing at the start of the holiday season, a little bit better than our expectations.”
This year, the company started Black Friday sales a week earlier as consumers look for value.
Shares of Best Buy are down 7% in pre-market trading. At the market close on Monday, shares were up nearly 19% year to date, the S&P 500’s (^GSPC) 25% profit.
According to Bloomberg consensus data estimates, the best buys to post for the third quarter are:
Adjusted Earnings Per Share: $1.26 vs. $1.29
Total Sales: $9.45 billion vs. $9.63 billion
Increase in overall store sales: -2.9% vs -0.92%
Total US same-store sales growth: -2.8% vs -1.04%
Sales growth for:
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Equipment: -14.7% vs -7.50%
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Entertainment: -18.8% vs -4%
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Consumer Electronics: -5.8% vs -2.72%
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Computing and Mobile Phones: +3.8% vs +3.5%
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Services: +6% vs +5.83%
International: -3.7% vs -0.57%
The company updated its full-year outlook. Same-store sales are expected to decline 2.5% to 3.5%. This compares to a previously expected decline of 3% to 1.5%.
Revenue for the year is estimated at $41.1 billion to $41.5 billion, down from the previous range of $41.3 billion and $41.9 billion.
Earnings per share have been updated to $6.10 and $6.25, compared to the previous range of $6.10 and $6.35.
Barry said the company is at an inflection point as “layers of pressure on the business,” such as inflation, the housing market, consumers spending on experiences, and a lack of new products begin to shift.
