Best Buy outperformed Wall Street’s sales expectations for the second quarter of the fiscal year ending 29 July.
However, the electronics retailer is approaching the rest of the year with caution due to a decline in post-pandemic spending on items such as kitchen appliances, computer monitors and other electronics.
Best Buy CEO Corie Barry anticipates this year will mark the “low point in tech demand” before a potential rebound in the consumer electronics industry next year.
Best Buy reported earnings per share of $1.22 in the fiscal second quarter, adjusted, exceeding the expected $1.06. Revenue for the quarter reached $9.58bn, surpassing Wall Street’s estimate of $9.52bn.
The company’s stock rose by more than 5% in early trading to nearly $80 per share.
Returning to pre-pandemic sales levels
Best Buy is experiencing a return to pre-pandemic sales levels as consumers revert to typical spending patterns amid inflationary pressures.
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Like Home Depot and Lowe’s, the company had experienced significant gains during the Covid-19 pandemic due to substantial one-time purchases.
However, the past year has brought challenges related to inflation and consumer shifts towards experiential spending.
While the company’s net income and sales have dipped in the past year, gaming systems have emerged as strong sales drivers. Online sales in the US declined by 7.1% year-over-year but still constitute a significant portion of Best Buy’s revenue.
Outlook and strategies for growth
The retailer has adjusted its full-year outlook, narrowing revenue expectations but slightly increasing profit projections.
Best Buy remains optimistic about sales trends improving in the latter half of the year, with better-than-expected back-to-school sales and stable laptop and TV sales.
The company has also explored new avenues for growth such as healthcare and a paid subscription programme called “My Best Buy.”
Best Buy is re-evaluating its store footprint to adapt to the changing retail landscape. It plans to close some stores, remodel others into experiential shops and expand outlet stores.
As the holiday season approaches, the company anticipates a return to pre-pandemic shopping behaviour, with consumers seeking deals and convenience.