Best Buy reported that same store US sales fell 10.4 percent and US revenue dropped 11 percent to $8.8 billion.
“In this environment, customers are clearly feeling cautious and making tradeoff decisions as they continue to deal with high inflation and low consumer confidence due to a number of factors,” Best Buy CEO Corie Barry told analysts on a conference call Thursday.
Sales actually worsened as the quarter progressed, with the stronger sales in February, weakening towards the close of the quarter, April 29.
But Best Buy continues to believe that consumer spending in consumer electronics should pick up starting at the end of the year.
As in the past, Barry told analysts that consumers who purchased electronics earlier in the pandemic will start to replace or upgrade their products, possibly at end of the year, and in 2024 and 2025.
And there will be more of them upgrading because, “On average US households have twice as many connected devices as they did in 2019,” Barry said.
She also reaffirmed, “Historically, consumers replace their tech every 3 to 7 years. Mobile phones on the lower end, computers in the middle and home theater and large appliances on the higher end.” The car audio replacement cycle is about 5 years, by some industry estimates.
More takeaway points:
Best Buy said it saw the downturn in CE spending start in Q1 2022.
The chain is now back to pre-pandemic levels of promoting (discounts).
Inventory levels are down 17 percent. The chain is targeting a 64 day supply.
US online revenue of $2.7 billion decreased 12 percent over last year. US online sales are 30.5 percent of sales (versus about 31 percent last year).
The largest contributors to the drop in Best Buy sales for the quarter were computers, appliances, home theater, and mobile phones, which were partially offset by growth in gaming and service categories.
Best Buy is closing 20 to 30 large format stores, undergoing 8 “Experience Store” remodels, and opening around 10 additional outlet stores during the fiscal year.
Barry also mentioned one of the new areas that the company is pursuing is electric vehicle (EV) chargers. “We carry multiple EV charging brands and we were the first to carry Tesla chargers,” she said.