Best Buy Co Inc. (NYSE:BBY) warned of lower sales and profits in its current fiscal year, as the consumer electronics chain faces caution stemming from inflation in customer spending habits and rising costs.
The Minnesota-based retailer said it now expects fiscal 2024 revenue to decline between 3% and 6% from a year earlier. Much of the decline in sales in the first quarter, Best Buy reported, will come from a tough annual comparison caused by increased spending on items like computers and televisions during the pandemic. Best Buy added that these tough comparisons are now expected to decline in the coming quarters.
When not adjusted for GAAP, diluted earnings per share for the 53-week period from January 29 also appears to be between $5.70 and $6.50, down from $7.08 in fiscal 2023.
Best Buy noted that the additional week in fiscal 2024 is expected to add about $700 million in revenue to the fourth quarter and boost the non-GAAP operating income rate by about 10 basis points. But the extra week, combined with higher consumption and stimulus compensation, is also expected to drive up expenses.
"We believe the macro and industry backdrop will continue to be under pressure in fiscal '24 and we will continue to adapt," CEO Cory Barry said in a statement Thursday.
The company has recently seen a downward trend in demand as rising inflation prompted some shoppers to rein in spending, with Barry previously describing customers as "uneven and unsettled" at the start of the new year.
In the three months through Jan. 28, enterprise comparable-store sales fell 9.3% year over year. However, the number was still better than the Bloomberg consensus estimate for a decline of 9.46%.
Analysts at Goldman Sachs said a softer outlook is likely to weigh on shares at Best Buy despite outperforming department store sales. The stock fell in pre-market trading on Thursday.
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