FILE - A woman walks with a boy to the Best Buy store at the Mall of New Hampshire, Tuesday, Aug. 4, 2020, in Manchester, N.H. Best Buy sales and profits slid in the second quarter, Tuesday, Aug. 29, 2023, as the nation's largest consumer electronics chain continues to wrestle with a pullback in spending on gadgets after Americans splurged during the pandemic.(AP Photo/Charles Krupa, File)
NEW YORK (AP) – Best Buy sales and profits slid in the second quarter as the nation’s largest consumer electronics chain continues to wrestle with a pullback in spending on gadgets after Americans splurged during the pandemic.
The decline in sales was smaller than what Wall Street had anticipated, however, and profits were better than expected.
The U.S. job market has remained resilient, but Americans are facing higher prices and more expensive credit with the Federal Reserve hiking benchmark interest rates to combat inflation. It’s more expensive to take out loans for appliances, cars and houses, or to use a credit card. As a result, consumers have become reluctant to spend unless there is a sale. They’re being more selective with what they will buy and, in many cases, trading down to buy cheaper stuff.
Comparable sales – sales from physical stores open at least a year, and digital channels – fell 6.3%, dragged down by declines in computing and appliances.
Best Buy, based in Minneapolis, earned $274 million, or $1.25 per share, during the quarter ended July 29. That easily topped the per-share earnings of $1.06 that Wall Street was expecting, according to a survey by FactSet, but below the $306 million the company earned in the same period last year.
Sales fell 7.2% to $9.58 billion, slightly better than analyst estimates.
“Our financial results were better than expected, and they reflect a consumer electronics industry that remains challenged due to the pull-forward of demand in prior years and the various macroeconomic factors that we are all too familiar with,” CEO Corie Barry said in a prepared statement.
This year will be the low point in demand for new technology after two years of declines, Barry said, and next year the consumer electronics industry should stabilize and enjoy possible growth as shoppers look to upgrade and replace their gadgets.
Best Buy Inc. lowered the high-end of its full year revenue outlook to the midpoint that it had previously issued but left the low-end of its revenue guidance unchanged. At the same time, it narrowed its profitability ranges.
Shares were essentially flat before the opening bell Tuesday.
