Best Buy broadly misses earnings expectations as consumers turn back to appliances and electronics

Even artificial intelligence couldn’t offset declining consumer demand at Best Buy (BBY).

For the twelfth consecutive quarter, the retailer posted negative same-store sales growth, down 2.9% year over year, compared to a decline of 0.92%. Net sales of $9.45 billion and adjusted earnings per share of $1.26 also fell short of expectations of $9.63 billion and $1.29 per share, respectively.

CEO Corie Barry attributed the miss to “a combination of overall continued macro uncertainty, customers waiting for deals and sales, and distractions during the run-up to the election, especially in non-essential categories” in the earnings call.

In the quarter, device and entertainment sales fell 14.70% and 18.80%, respectively, compared to estimates of a decline of 7.5% and 4%. Consumer electronics sales fell by 5.8%.

Computer and mobile phones saw sales increase by 3.80%, while services revenue rose 6%, both slightly better than expectations.

The company expects same-store sales growth in the fourth quarter to be flat to a decline of 3%, undermining the optimistic view that demand stabilized after the pandemic.

“The fourth quarter revenue is a sequential improvement,” Barry told reporters in a media call. “We like what we see at the beginning of the holiday, a little better than our expectations.”

This year, the company started its Black Friday sale a week early as consumers look for value.

Best Buy shares are down 7% in pre-market trading. As of market close Monday, shares were up nearly 19% year to date, lagging the S&P 500’s (^GSPC) 25% gain.

Here’s what Best Buy posted for the third quarter, compared to Bloomberg consensus data estimates:

Adjusted earnings per share: $1.26 vs. $1.29

Net turnover: $9.45 billion versus $9.63 billion

Total same-store sales growth: -2.9% vs -0.92%

Total US same-store sales growth: -2.8% vs vs -1.04%

Sales growth for:

• Devices: -14.7% vs -7.50%

• Entertainment: -18.8% vs -4%

• Consumer electronics: -5.8% vs -2.72%

• Computers and mobile phones: +3.8% vs. +3.5%

• Services: +6% vs +5.83%

International: -3.7% vs -0.57%

The company has revised its full-year guidance. Same-store sales are expected to decline 3.5% to 2.5%. That’s compared to the previously expected decline of 3% to 1.5%.

Revenue for the year is forecast at $41.1 billion to $41.5 billion, down from the previous range of $41.3 billion to $41.9 billion.

Earnings per share were updated to $6.10 and $6.25, compared to a previous range of $6.10 and $6.35.

Barry said the company is at an inflection point as “layers of pressures that have been placed on the business,” such as inflation, the housing market, consumer spending on experiences and the lack of new products, are beginning to change.

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