Best Buy’s Stock Slides as ‘softer-than-expected’ Demand Leads to Sales and Earnings Miss

Shares of Best Buy Co. Inc. dropped 7.3% in premarket trading after the retailer's third-quarter financial results fell short of analysts' expectations for both earnings and sales.

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During the third quarter, Best Buy reported net income of $273 million, or $1.26 per share, a slight increase from $263 million, or $1.21 per share, in the same period last year. However, on an adjusted basis, the company also posted earnings of $1.26 per share, which missed the consensus estimate of $1.30 per share.

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Revenue for the quarter came in at $9.445 billion, down from $9.756 billion in the year-ago quarter. Analysts surveyed by FactSet had expected sales of $9.631 billion, making the reported figure another disappointment.

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Corie Barry, Best Buy’s CEO, addressed the weaker-than-anticipated results, stating that sales were “a little softer than expected” during the quarter. Barry cited several contributing factors, including ongoing macroeconomic uncertainty

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customers delaying purchases while waiting for deals and promotions, and distractions caused by the election period, especially in non-essential product categories. Despite these challenges, Barry noted some improvement in demand in the early weeks of the fourth quarter, as holiday shopping began and election-related distractions subsided.

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Comparable sales for the third quarter fell by 2.9%, an improvement from the 6.9% decline recorded in the same period last year but worse than the 1% drop analysts had anticipated.

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In light of these results, Best Buy revised its full-year guidance. The company now forecasts revenue between $41.1 billion and $41.5 billion, a reduction from its prior projection of $41.3 billion to $41.9 billion. It also updated expectations for comparable sales, predicting a decline of 3.5% to 2.5%, compared to the previously anticipated decline of 3.0% to 1.5%. Analysts, on average, expect full-year sales of $41.539 billion and a comparable sales decline of 2.1%.

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Best Buy also adjusted its earnings forecast for the full year. The retailer now expects adjusted earnings per share to range between $6.10 and $6.25, down slightly from its earlier guidance of $6.10 to $6.35. This falls just below analysts’ consensus estimate of $6.26 per share, according to FactSet.

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Despite these recent setbacks, Best Buy’s stock has gained 18.8% so far in 2024. However, this performance lags behind the broader S&P 500 index, which has risen 25.5% over the same period.

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The results reflect the challenges Best Buy faces as it navigates macroeconomic uncertainties, shifting consumer behaviors, and increased competition during a crucial period for retailers. While early holiday sales provide some optimism, the lowered outlook suggests the road ahead may remain bumpy for the electronics retailer.

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