Best Buy Co. predicted that sales will fall a second straight year as consumers retreat from electronics and other discretionary goods.
Revenue will slip to between $43.8 billion and $45.2 billion in the current fiscal year, the retailer said in a statement March 2. Even at the high end, that would trail the $45.7 billion average of analyst estimates compiled by Bloomberg and the $46.3 billion the company generated last year.
The forecast signals another rocky year for Best Buy as high inflation forces shoppers to spend more on basic goods and think twice before buying televisions, computers and appliances. The company’s revenue declined in 2022 as the sales surge that began early in the pandemic fizzled out.
“The consumer electronics industry continues to feel the effects of the broader macro environment and its impact on consumers,” Chief Financial Officer Matt Bilunas said in the statement. The retailer said pressure on sales would be at its worst in the current quarter.
Best Buy shares fell 1.1% at 9:38 a.m. March 2 in New York. The stock climbed 2.9% this year through March 1, while an S&P index of US consumer-discretionary companies advanced 11%. Best Buy sank 21% in 2022.
Adjusted earnings this year will be no more than $6.50 a share, Best Buy said. That trailed the $6.75 estimated by analysts. Comparable sales will fall between 3% and 6% this year, Bilunas said. Analysts had estimated only a 1.8% decline.
The sober forecast echoes the outlooks of Walmart Inc., Target Corp. and Home Depot Inc., which all emphasized uncertainty around consumer spending and the U.S. economy. Sales of discretionary goods — such as Best Buy’s wares — are likely to remain particularly muted this year as high inflation forces shoppers to spend more on basic goods.
Still, Best Buy expects 2023 to be the bottom of the decline in tech demand, chief executive officer Corie Barry said on a call with analysts, as the need emerges to replace some of the gadgets consumers bought in the past three years. And tech companies are likely to launch product upgrades, which had taken a back seat in recent years as vendors focused on supply, she said.
Best Buy is looking to tap those trends by updating its retail footprint and refining its membership offerings, among other steps. In the year through January 2024, the company plans to close 20 to 30 large-format stores and open around 10 new outlets, Barry said.
Like other big retailers, Best Buy turned in a robust 2022 fourth quarter. Adjusted earnings of $2.61 a share easily exceeded the $2.10 average analyst estimate. Sales of $14.7 billion were in line with projections.
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