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.
“During the second half of the quarter, a combination of the ongoing macro uncertainty, customers waiting for deals and sales events, and distraction during the run-up to the election, particularly in non-essential categories, led to softer-than-expected demand,” Best Buy CEO Corie Barry said in the release.
“In the first few weeks of Q4, as holiday sales have begun and the election is behind us, we have seen customer demand increase again.”
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.
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.
Prior to the earnings release, analysts had expected new technologies to boost Best Buy’s results.
“The company should see a return to growth in the first half of 2025, following many consecutive quarters of negative comps, as newness and the replacement cycle kicks in, especially for products purchased in 2019-2020,” Telsey Advisory Group’s Joe Feldman wrote in a note to clients.
