Best Buy said it expects another down year for the consumer electronics industry in 2023, but sales should pick up after that.
“We are preparing for another down year for the CE industry,” Best Buy CEO Corie Barry told analysts on a conference call last Thursday, adding, “Based on what we can see right now, we believe that calendar 2023 will be the bottom for the decline in tech demand.”
Barry presented a number of reasons for optimism after 2023. One is a theory held by many car audio executives—that the new customers gained during the pandemic, will return for upgrades or repairs.
“Historically, customers upgrade or replace their tech every three to seven years depending on the category, with mobile phones on the lower end, computing in the middle and home theater and large appliances toward the higher end of that range,” Barry said. So those who purchased early in the pandemic may enter the upgrade cycle next year.
[Separately, the car audio upgrade or replacement cycle is about every 5 years according to the estimates of two 12 volt executives.]
Best Buy is also predicting demand in the coming year to be spurred by innovation in augmented reality (AR) and other areas. Driving sales this year will be laptops with new dual screens and foldable laptops. Another draw will be “higher performance audio and video in home theater,” Barry said.
But, overall, the chain sees a volatile economy causing lower sales this year. “… the consumer electronics industry continues to feel the effects of the broader macro environment and its impact on consumers,” said Matt Bilunas, Best Buy CFO. “As a result, our outlook assumes [a] comparable sales decline [of] three percent to six percent for the year, with the most sales pressure in the first quarter, as year-over-year comparisons ease through the year.”
Relating to its stores, Best Buy is moving to a more dynamic mix of different sized stores and has closed 70 of its large format stores (7 percent) over the past few years. Best Buy said it will close 20 to 30 large stores this fiscal year (through the last week in January, 2024). It will remodel 8 stores and open around 10 of its new format outlet stores.
For Best Buy’s fiscal Q4 ended January 28, the company reported $13.5 billion in domestics sales, down 10 percent from $15 billion a year ago. Domestic online revenue fell 13 percent to about $5 billion, representing about 38 percent of sales. The categories which saw slower sales included computing, home theater, appliances and mobile phones.
However, the chain said its inventory levels are now in line with sales levels.
Same-store sales decreased by 9.3 percent during the fourth quarter, and fell 9.9 percent for the full year.
Best Buy’s net income for the quarter fell by 21 percent to $495 million, from $626 million a year ago.
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Cut sales floor coverage to a skeleton crew and promote the revolving door of employment and this is what happens. Not a huge surprise to hear.
*Another* down year? If they were down in 20-22, it’s their fault, not the market.
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