Best Buy said it is feeling the pinch of inflation in its latest earnings report.
Consumers are now more apt to look for bargains than last year. And those who loaded up on computers and home theater when they stayed at home during the pandemic are now returning to work.
Sales for the quarter ended April 30 declined in almost all categories with the largest losses in computing and home theater.
Best Buy CEO Corie Barry said that purchases by lower income shoppers, who were new to Best Buy during the pandemic, have recently declined.
Domestic revenue of $9.89 billion decreased 8.7 percent during the quarter versus last year, primarily driven by a comparable sales decline of 8.5 percent.
Domestic online revenue of $3.06 billion decreased 14.9 percent on a comparable basis, and as a percentage of total Domestic revenue, online revenue was 30.9% versus 33.2% last year.
Consumers are more budget conscious and that trend is expected to continue, said Barry but the company is not expecting a full recession.
Separately, the Consumer Technology Assoc. just released a study claiming most Americans, regardless of political affiliation (68 percent), believe inflation is the most important issue facing them and their household.
For the quarter ended April 30, Barry said, “… conditions worsened since we provided our guidance in early March, including higher inflation and the war in Ukraine, which resulted in our sales being slightly lower than our expectations and supply chain costs a little higher than we planned.”
The company therefore lowered its guidance for the full year to a comparable sales decline in the range of 3 percent to 6 percent versus 1 to 4 percent previously.
In new categories, Best Buy is continuing to expand into ebike scooters and mopeds, a sector it entered in some stores late last year. Over the next 18 months, it will roll out the category to nearly all stores. It will also sell charging devices and Geek Squad will assemble the e-bikes for customers. A pilot program will launch to test servicing and repairing the bikes at some stores.
Earnings per share were $1.49 compared to $2.32 for the quarter a year ago.
Q1 revenue of $10.6 billion remains $1.5 billion or 16% higher than Q1 of pre-pandemic fiscal ‘20, said the company.
Source: Best Buy, FOX31