Even artificial intelligence couldn’t make up for flagging 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 versus estimates of down 0.92%. Net sales of $9.45 billion and adjusted earnings per share of $1.26 also missed expectation of $9.63 billion and $1.29 per share, respectively.
CEO Corie Barry attributed the miss to “a combination of overall ongoing macro uncertainty, customers waiting for deals and sales, and distraction during the run-up to the election, particularly in nonessential categories” in the earnings call.
In the quarter, appliance and entertainment sales dropped 14.70% and 18.80%, respectively, compared to estimates of down 7.5% and 4%. Consumer electronics sales declined 5.8%.
Computing and mobile phones saw a gain in sales, up 3.80%, while services revenue was up 6%, both slightly beating estimates.
The company expects same-store sales growth for the fourth quarter to be flat to down 3%, slashing optimistic views that demand was stabilizing post pandemic.
“Fourth quarter sales is a sequential improvement,” Barry told reporters in a media call, “We like what we’re seeing early in the holiday, a little bit better than our expectations.”
This year, the company kicked off Black Friday sales a week earlier as consumers hunt for value.
Shares of Best Buy are down 7% in pre-market trading. As of Monday at market close, shares were up nearly 19% year to date, trailing behind the S&P 500’s (^GSPC) 25% gain.
Here’s what Best Buy to posted for the third quarter, compared to Bloomberg consensus data estimates:
Adjusted earnings per share: $1.26 versus $1.29
Net sales: $9.45 billion versus $9.63 billion
Same-store sales growth overall: -2.9% versus -0.92%
Total US same-store sales growth: -2.8% versus versus -1.04%
Sales growth for:
Appliances: -14.7% versus -7.50%
Entertainment: -18.8% versus -4%
Consumer electronics: -5.8% versus -2.72%
Computing and mobile phones: +3.8% versus +3.5%
Services: +6% versus +5.83%
International: -3.7% versus -0.57%
The company updated its full-year outlook. Same-store sales are projected to decline 3.5% to 2.5%. That’s compared to previously expected decline of 3% to 1.5%.
Revenue for the year is projected at $41.1 billion to $41.5 billion, lower than the previous range of $41.3 billion and $41.9 billion.
Earnings per share is updated to $6.10 and $6.25, compared to a previous range of $6.10 and $6.35.
Barry said the company is at a turning point as “layers of pressures that have been on the business” like inflation, the housing market, consumers spending on experiences, and lack of new products start to change.
