Best Buy Co. said a painful sales slump in consumer electronics and household appliances is starting to show signs of easing.
(Bloomberg) — Best Buy Co. said a painful sales slump in consumer electronics and household appliances is starting to show signs of easing.
Total comparable sales are likely to be “slightly better” in the third quarter than the 6.2% drop in the second, the gadget retailer said Tuesday as it reported results. The measure will continue to improve in the fourth quarter with a performance that will range from a decline of 3% to potentially even a slight increase, Chief Executive Officer Corie Barry said on a conference call.
“Next year the consumer electronics industry should see stabilization and possibly growth driven by the natural upgrade and replacement cycles and the normalization of tech innovation,” Barry said.
The slowly improving performance signals a measure of relief from a sharp downturn that began more than a year ago as US consumers retreated from electronics and other discretionary goods. But Best Buy still has a long road to recovery as shoppers spend more on basic goods, as well as on services such as travel and restaurant meals, and investors remain cautious.
Read More: Americans Keep Spending But Big Retailers Doubt It’ll Last
“The blunt truth is that many consumers have neither the time nor the confidence to buy big-ticket items like televisions, even if they wanted to,” Neil Saunders, managing director of GlobalData, said in a note to clients. “Best Buy’s view that demand will start to strengthen as the company moves into next year is possible, but perhaps a shade optimistic.”
The shares rose 4.3% in New York. Best Buy slid 7.7% this year through Monday, while the S&P 500 index advanced 15%.
During the fiscal second quarter, which ended in late July, Best Buy’s adjusted earnings fell to $1.22 a share. Analysts had estimated $1.07. US comparable sales fell 6.3% during the latest quarter, the shallowest decline in more than a year and in line with analyst estimates.
For the fiscal year as a whole, the company forecast adjusted earnings of $6 to $6.40 a share. At the midpoint, that was 10 cents higher than the previous outlook.
Best Buy, which gets almost all its revenue from the US, said total comparable sales would slide at least 4.5%, worse than the decline of at least 3% it predicted in May. The measure fell about 8% during the first half of the year.
(Updates with CEO comment in second paragraph)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.