Same-store sales of Best Buy Co Inc (NYSE:BBY) dropped 8% during the first quarter ended April 30, amid lukewarm demand due to high prices. The company lowered its revenue outlook for the year after accruing $10.65 billion against an expectation of $10.41 billion.
Riding The Storm
Corie Barry, Best Buy’s CEO, said on a call with analysts Tuesday about the softer demand: “That trend has continued into the beginning of Q2 and it does not appear that it will abate in the near-term.”
The adjusted outlook for the year does not mean the company is preparing for a full recession, Barry added.
Proof of this, she said, is the fact that company sales dropped but not as low as Wall Street had estimated. Customers still purchase Best Buy products that have become more significant in their everyday lives, such as consumer electronics.
“The last two years have clearly underscored the importance of tech in people’s lives, so I think it’s important for us to have that as a backdrop,” Barry said.
In terms of earnings per share, Best Buy hit $1.57 adjusted versus $1.61 expected, while it topped a revenue of $10.65 against estimates of $10.41 billion. The company has adjusted its full-year revenue range from $49.3-$50.8 billion to $48.3-$49.9 billion.
The company estimates that same-store sales could decline between 3% and 6%, an adjustment to the previous estimate of 1% to 4% drop.
In terms of net income for the quarter, Best Buy saw a decline to $341 billion ($1.49 per share) from $595 million ($2.32 per share) from the previous year.
Net sales decreased to $10.41 billion from $11.64 billion a year earlier, CNBC reports.
Target Corporation (NYSE:TGT) also missed Wall Street’s earnings expectations due to rising fuel and freight costs, while the demand for discretionary products tailed off among consumers with retailers feeling the brunt.
Target CEO Brian Cornell said customers were avoiding bigger products such as TV sets and kitchen appliances, which are also in Best Buy’s stock.