Best Buy Co. is betting that a long sales slump in consumer electronics and household appliances will start to ease later this year.
(Bloomberg) — Best Buy Co. is betting that a long sales slump in consumer electronics and household appliances will start to ease later this year.
The gadget retailer’s first-quarter profit exceeded estimates and it stood by its annual financial forecasts on Thursday, reiterating that comparable sales will fall by no more than 6% this year. That implies shallower declines in the second half of the year after a 10% plunge in the first quarter and a second-quarter drop of as much as 8%.
“We continue to believe that calendar 2023 will be the bottom for the decline in tech demand,” Chief Executive Officer Corie Barry said on a conference call with analysts and investors. “Customers are clearly feeling cautious and making trade-off decisions.”
Best Buy’s steady outlook signals a ray of hope, however faint, after sales tumbled last year as consumers retreated from electronics and other discretionary goods. That followed a binge during the early stages of the pandemic. The retailer still has a long road to recovery as inflation forces shoppers to spend more on basic goods, making them think twice before buying televisions, computers and appliances.
Best Buy rose 1.8% at 9:46 a.m. in New York. The stock had slid 14% this year through Wednesday, while an S&P index of consumer-discretionary companies advanced 16%.
“Expectations into the print were low,” Evercore ISI analyst Greg Melich said in a note to clients. “The relatively in-line second-quarter guide and the reiterating of the full-year guide should be considered as not as bad as feared.”
During the first quarter, Best Buy’s adjusted earnings totaled $1.15 a share, compared with the $1.11 predicted by Wall Street. Sales slid 11% to $9.47 billion, compared with the $9.54 billion estimated by analysts.
(Updates shares in fifth paragraph.)
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