Best Buy raised its full-year profit guidance on Thursday after beating expectations for profit and revenue for the most recent quarter.
Shares of Best Buy jumped more than 15% in morning trading Thursday.
The retailer now expects to see full-year adjusted earnings per share in the range of $6.10 to $6.35, down from a previous range of $5.75 to $6.20. The company, however, lowered the higher end of its guidance ranges for both full-year revenue and comparable sales.
“As we look to the back half of the year, we expect our industry to continue to show increasing stabilization,” Best Buy CFO Matt Bilunas said in the company’s press release.
See how the consumer electronics retailer did for the period ending August 3 compared to what Wall Street expected, based on a survey of analysts by LSEG:
- Earnings per share: $1.34 vs $1.16 expected
- Annuity: $9.29 billion vs. $9.24 billion expected
The company reported net income for the quarter of $291 million, or $1.34 per share, compared with $274 million, or $1.25 per share, a year earlier.
Net sales in the quarter fell to $9.29 billion from $9.58 billion in the year-ago period.
Comparable sales fell 2.3% during the quarter, compared with a 6.2% drop a year earlier.
That decline in comparable sales was the company’s best result for the metric since the fourth quarter of fiscal 2022, CEO Corie Barry said on the company’s earnings call.
Barry said the industry is returning to growth, adding that Best Buy’s position in the industry helps the retailer “capture that growth trajectory.”
Best Buy is in the midst of a turnaround effort in response to a two-year sales slump. Discretionary goods retailers around the world have struggled with lower consumer demand in the wake of unusually high sales throughout the Covid pandemic and as consumers withdraw due to higher inflation.
As the long-awaited replacement cycle of pandemic-era tech purchases begins to flow, the retailer hopes to cash in through marketing and operational initiatives. Best Buy said in July it would add trained sales teams to three key parts of its stores — computers, appliances and home theater — and launch a marketing campaign that includes YouTube videos to attract consumer interest.
The company is also betting on a wave of new tech gadget debuts, such as a collection of new iPads launched by Apple in May and AI-enabled laptops advertised by Microsoftto promote sales.
The company on Thursday reported comparable sales growth of 6% in its domestic tablet and PC categories. However, that was “offset” by declines in appliances, home theater and gaming, executives said.
Barry added that AI could continue to boost sales across all categories in the coming years.
“We believe we are just at the beginning of AI’s impact on technology innovation and customer demand,” he said.
Best Buy has doubled the number of consumers choosing to trade in old electronics for new, which Barry said is “another indicator that people are looking to refresh and refresh” their current tech gadgets.
“We’ve taken advantage of demand driven by our customers’ desire to replace or upgrade their products, combined with new innovations,” Barry said during the company’s earnings call. “We see a consumer who looks for value at sales events and one who is also willing to spend on premium products when needed or when new, exciting technology is available.”
But the consumer environment remains “unpredictable and uneven,” Barry said, citing the upcoming election and holiday season.
“There’s probably even more risk that the consumer will be a little fickle” in the last half of the year, he said.
