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Best Buy extends streak of quarterly sales declines as Americans focus on essential purchases | The mighty 790 KFGO

By Vaseline May30,2024

Best Buy Fargo (KFGO file photo)

NEW YORK (AP) — Best Buy reported another quarterly sales decline as the nation’s largest consumer electronics chain struggles with cautious spending by Americans as they prioritize essential purchases and pay more for things like rent.

The Minneapolis-based company has been reporting quarterly revenue declines for more than two years, dating back to the pandemic as households turned to new laptops and other goods to help them work from home.

Sales were worse than Wall Street expected, but profits were better than expected. Best Buy offered moderate earnings and revenue guidance for the year.

Shares rose more than 1% in premarket trading Thursday.

The U.S. labor market has remained strong, but Americans are paying more for necessities like rent. It appears that inflation overall is starting to cool. Still, Americans pay more when they use credit cards because interest rates are higher, causing many to postpone major purchases such as appliances and other goods typically purchased with credit.

That’s a reversal of what Best Buy’s customers did during the pandemic, when sales were fueled by excessive spending by employees who splurged on electronics to help them work from home or better equip their children for virtual learning . Government stimulus checks have also fueled much of that spending.

Best Buy plans to modernize stores to entice shoppers and focus on paid membership services that resonate with customers.

Best Buy reported earnings of $246 million, or $1.13 per share, for the quarter ended May 4. That compares with a profit of $244 million, or $1.11 per share, in the same period a year ago. Adjusted earnings per share were $1.20, easily exceeding Wall Street expectations of $1.08, according to a FactSet poll.

Revenue fell from $9.46 billion to $8.85 billion, falling short of the $8.96 billion expected by industry analysts.

Comparable sales – those of established online and physical store channels – fell by 6.1%.

Best Buy expects earnings per share for this year ranging from $5.75 per share to $6.20 per share. Analysts had forecast earnings of $6.04 per share.

Best Buy expects sales of between $41.3 billion and $42.6 billion this year. Analysts expect $41.94 billion, according to FactSet.

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