Best Buy (NYSE: BBY) reported its fiscal third-quarter earnings on Tuesday, missing Wall Street’s revenue expectations and slashing its full-year sales forecast. The consumer electronics retailer cited softer-than-expected demand for its underperformance, despite the release of new products, such as the latest iPhones and artificial intelligence-enabled laptops.
Quarterly Performance
For the quarter ending November 2, 2024, Best Buy reported the following key metrics:
- Earnings per share (EPS): $1.26 (adjusted) vs. $1.29 expected.
- Revenue: $9.45 billion vs. $9.63 billion expected.
Net income rose slightly to $273 million, or $1.26 per share, compared to $263 million, or $1.21 per share, in the same period last year. However, net sales dropped to $9.45 billion from $9.76 billion in the prior year, reflecting ongoing challenges in the consumer electronics market.
Comparable sales declined by 2.9% overall, with a 2.8% drop in the U.S. Weakness in categories like appliances, home theaters, and gaming drove the decline, offset slightly by growth in computing, tablets, and services such as tech installation.
Revised Full-Year Guidance
Best Buy revised its full-year revenue outlook to a range of $41.1 billion to $41.5 billion, down from its previous forecast of $41.3 billion to $41.9 billion. The company now expects full-year comparable sales to decrease between 2.5% and 3.5%, compared to its earlier projection of a 1.5% to 3% drop.
CEO Corie Barry attributed the weaker outlook to “macro uncertainty,” noting that customers are delaying purchases, waiting for discounts, and focusing on essential spending amid economic concerns. Additionally, the run-up to the U.S. election served as a distraction for consumers, particularly in non-essential product categories.
Despite these challenges, Barry expressed cautious optimism for the holiday season, stating that demand has picked up in recent weeks as election-related concerns ease and holiday sales events gain traction.
“We continue to see a consumer who is seeking value and sales events,” Barry said. “However, they are also willing to spend on high-price-point products when they need to or when there is new, compelling technology.”
Post-Pandemic Sales Slump
The electronics industry has experienced a two-year sales slump following a pandemic-driven spike in purchases of laptops, home theater systems, and other tech products. Best Buy is now waiting for a new wave of replacement purchases and upgrades to higher-tech devices.
Inflation and shifting consumer spending patterns have also weighed on sales. Many Americans are prioritizing essentials like food and utilities over discretionary purchases, while others are spending more on services, such as travel and dining out, rather than on electronics.
Challenges in Driving Growth
Best Buy had hoped that the launch of new products, including Apple’s updated iPads and Microsoft’s AI-enabled laptops, would drive demand this quarter. However, these releases failed to deliver a significant boost to sales. The company’s digital sales also softened, falling 1% year-over-year in the U.S.
Best Buy’s CFO Matt Bilunas and CEO Barry have previously indicated that 2024 would be a year of “increasing industry stabilization.” However, the weaker-than-expected results suggest the recovery may take longer than anticipated.
Stock Performance
Ahead of Tuesday’s market open, Best Buy shares fell 7% in premarket trading. As of Monday’s close, the stock was up approximately 19% year-to-date, underperforming the S&P 500’s 26% gain during the same period. Best Buy’s stock closed on Monday at $93.03, giving the company a market value of $19.98 billion.
Outlook
As Best Buy enters the critical holiday season, the company is balancing its optimism for higher sales during peak shopping events with a pragmatic approach to uneven customer behavior. While demand for high-tech devices and services remains a bright spot, the broader challenges of inflation, economic uncertainty, and changing consumer preferences continue to weigh on the retailer’s outlook.
↔ 
↔ 
↔ 
↔ 
↔ 
↔ 
↔ 
↔ 
↔ 
↔ 
→ 
→ 
→ 
→ 
→ 
→ 
→ 
