Best Buy beats sales estimates as discounts spur demand
2022.08.30 16:06
FILE PHOTO: People walk past a Best Buy store in Manhattan, New York City, U.S., November 22, 2021. REUTERS/Andrew Kelly/File Photo
(Reuters) -Best Buy Co Inc reported a smaller-than-expected drop in quarterly comparable sales on Tuesday as steep discounts helped soften the blow to electronics demand from rampant inflation.
The retailer’s shares, which have lost more than a quarter of their value this year, rose about 3% in premarket trading.
Firms from television panel maker LG Display (NYSE:LPL) to PlayStation maker Sony Corp (TYO:6758) have in recent weeks warned of the toll inflation is taking on demand for home electronics, fanning fears the industry’s pandemic growth was at an end. Best Buy, which cuts its full-year sales projection in late July, has tried to arrest the slowdown by offering steep discounts on products.
The efforts helped it reduce inventories to $6.04 billion in the second quarter from $6.26 billion at the end of April.
A recent pullback in gasoline prices has also eased some pressure on consumers’ wallets. But with inflation perched at four-decade highs and the U.S. Federal Reserve raising interest rates aggressively, fears of a recession are growing.
“We are clearly operating in an uneven sales environment,” Chief Executive Officer Corie Barry said.
The company’s comparable sales decreased 12.1% in the quarter ended July 30, compared with analysts’ estimates of a 12.6% fall, according to Refinitiv data.
Best Buy said it expects sales to decline slightly more than 12.1% in the third quarter.
On an adjusted basis, the company earned $1.54 per share, beating analysts’ estimates of $1.27 per share, helped by a cutback in incentive payouts to employees.
