Customers shop at a Best Buy store on August 24, 2021 in Chicago, Illinois. Best Buy reported a 20% increase in second-quarter sales as consumers bought electronics to adapt to lifestyle changes related to the ongoing pandemic.
Scott Olson | Getty pictures
Best Buy shares rose early Tuesday, when the consumer electronics retailer beat Wall Street̵[ads1]7;s revenue estimates for the first quarter of the fiscal year, even as customers faced high levels of inflation and the company was driven by Covid stimulus a year ago.
The shares rose around 2% in pre-market trading.
Here’s how the retailer did in the three-month period that ended April 30 compared to what Wall Street expected, according to a survey among analysts from Refinitiv:
- Earnings per share: $ 1.57 adjusted vs. $ 1.61 expected
- Revenue: $ 10.65 billion against the expected $ 10.41 billion
Best Buy’s net income in the first quarter fell to $ 341 million, or $ 1.49 per share, down from $ 595 million, or $ 2.32 per share, a year earlier. Excluding goods, it earned an adjusted $ 1.61 per share.
Net sales fell to $ 10.41 billion from $ 11.64 billion the year before.
Sales in the same store for Best Buy fell by 8% compared to the same period last year, a better performance than the fall of 8.6% as analysts expected, according to FactSet.
Investors have examined retailers’ earnings for signs of health for the US consumer with inflation at four decades high. With Best Buy, some were concerned that the company would be particularly vulnerable to a withdrawal. It faced tough comparisons with a quarter a year ago of pandemic-driven demand for home theater, computer monitors and kitchen appliances. As a result, sales in the same store increased by 37.3%.
Best Buy also told Wall Street at an investor day in March that sales would be softer after two years of very high demand. However, CFO Matt Bilunas said the company eventually expected demand for pre-pandemic sales over the next few years.
Walmart and Targets raised investors’ concerns last week. Both large retailers reported sales growth in the first quarter of the fiscal year, but missed Wall Street’s earnings expectations as fuel and shipping costs increased and consumer demand for higher margins, discretionary purchases fell. In particular, Target CEO Brian Cornell said that customers skipped large items such as TVs and kitchen appliances – items that Best Buy also sells.
Traders’ results contributed to a big sale on Wall Street last week, which pulled Best Buy’s stock to a 52-week low on Friday.
These temperate expectations probably set the stage for Wall Street’s positive reaction to Best Buy on Tuesday morning, even though the retailer cut the forecast.
Best Buy said it now expects full-year revenue ranging from $ 48.3 billion to $ 49.9 billion, compared to previous prospects of $ 49.3 billion to $ 50.8 billion. It said that sales in the same store will fall between 3% and 6%, a sharper fall than the decline of 1% to 4% as previously expected. It expects adjusted earnings per share in a range of $ 8.40 to $ 9.00, compared to the previous outlook of $ 8.85 to $ 9.15.
On Monday, shares rose less than 1% to close at $ 72.59. The company’s shares are down approx. 29% so far this year and performs worse than the S&P 500’s decline of approx. 17% so far this year.
This story is evolving. Please check back for updates.