NEW YORK (AP) — Best Buy posted declines in fiscal second quarter profits and sales as the nation's largest consumer electronics chain struggled with weakening consumer demand for gadgets and high costs that rippled through its supply chain.
But the results, announced on Tuesday, were above analysts' expectations. That pushed shares up nearly 3% higher in premarket trading.
Best Buy reported that net income fell 60% to $306 million, or $1.35 per share, for the three-month period ended July 30. That compares with $734 million, or $2.90 per share, in the year-ago period. Revenue dropped 13% to $10.33 billion.
Analyst were expecting $1.27 per share on sales of $10.27 billion, according to FactSet.
Comparable sales — sales in stores open at least a year — dropped 12.1% compared to a 19.6% increase in the year-ago period.
Domestic gross profit rate was 22.0% versus 23.7% last year in part because the company stepped up discounts to move inventory.
Like many retailers, Best Buy entered the year expecting that financial results would be weaker than in 2021 when consumer spending was fueled by government stimulus support.
But soaring prices on necessities like food and gas have forced families to become more cautious. They are doing without new clothing, electronics, furniture and almost everything else that is not absolutely necessary. And spending habits have shifted faster this year than anyone expected. After being cooped up at home during the pandemic, Americans seemed to shift almost overnight to spending on dinners out, movies and concerts, and travel. That has hurt earnings across all types of retailers from Target to Macy's.
Minneapolis-based Best Buy warned in July that sales would fall more than expected. It had forecast this year’s sales at stores opened at least a year to decline 11%, much steeper than the 3% to 6% drop it originally forecast in May. For the fiscal second quarter, it said in July that comparable sales would be down 13%.
For the year, Best Buy is sticking to its previous forecast for an 11% drop in comparable sales.
Looking ahead to the fiscal third quarter, it expects that comparable sales will decline slightly more than the 12.1% decline it reported in the fiscal second quarter.
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Follow Anne D’Innocenzio: http://twitter.com/ADInnocenzio
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