Best Buy cuts holiday quarter guidance due to ‘uneven’ consumer demand (NYSE:BBY)
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Best Buy (NYSE:BBY) slipped in early trading on Tuesday after posting a mixed Q3 earnings report. The retailer said that in the more recent macro environment, consumer demand has been even more uneven and difficult to predict. “Based on the sales trends in Q3 and so far in November, we believe it is prudent to lower our annual revenue outlook,” updayted CEO Corie Barry.
The retailer said it saw domestic comparables sales fell 7.3% during the quarter. The largest drivers of the comparable sales decline on a weighted basis were appliances, computing, home theater and mobile phones. Those drivers were partially offset by growth in gaming. International comparable sales dropped 1.9% during the quarter.
Best Buy’s (BBY) domestic gross profit rate improved 100 basis points to 22.9% of sales. The higher gross profit rate was boosted by improved financial performance from the company’s membership offerings, which included higher services margin rates. Favorable product margin rates and lower supply chain costs were also margin drivers. The international business gross profit rate was down 130 basis points to 22.1% due chiefly to unfavorable product margin rates.
Non-GAAP operating income as a percentage of revenue declined to 3.8% of sales from 3.9% a year ago.
Looking ahead, Best Buy (BBY) lowered its comparable sales expectations for the holiday quarter. The company now expects FY24 revenue of $43.1B to $43.7B vs. a prior outlook for $43.8B to $44.5B and the consensus estimate of $44.1B. EPS is expected to land in a range of $6.00 to $6.30 vs. $6.00 to $6.40 prior and $6.19 consensus.
Shares of Best Buy (BBY) fell 4.86% in premarket trading on Tuesday to $64.80 vs. the 52-week trading range of $62.30 to $93.32.
