Best Buy Co Inc BBY-N on Thursday posted a smaller-than-expected drop in comparable sales and said inflation-induced weakness in electronics should bottom out by the end of the year, sending shares of the top U.S. electronics retailer up 4 per cent.
The company, which beat its first-quarter profit estimates, also maintained its full-year profit and revenue forecasts, joining retailers Home Depot HD-N and Target Corp TGT-N, as inflation-hit Americans cut spending on non-essential goods.
“Expectations into the (Best Buy) print were low ... and the reiterating of the full-year guide should be considered as not as bad as feared,” Evercore analysts said in a note.
Steep discounts have helped retailers of discretionary items lure in budget-conscious customers looking for cheaper deals on TVs and laptops among other big-ticket items.
Best Buy’s adjusted net earnings stood at $1.15 per share in the quarter ended April, above the average analyst estimate of $1.11 per share, according to IBES data from Refinitiv.
Discounts helped Best Buy arrest the decline in its first-quarter comparable sales to 10.1 per cent, compared with analysts’ average estimate of a 10.3 per cent fall.
It expects a smaller decline in second-quarter comparable sales in the range of 6 per cent to 8 per cent compared to the prior quarter.
“Customers are clearly feeling cautious and making tradeoff decisions as they continue to deal with high inflation,” said Chief Executive Officer Corie Barry.
Shares of the company fell nearly 14 per cent so far this year amid a volatile macro and consumer industry backdrop.
“We expect the macro environment to continue to pressure demand in our industry this year. However, our guide for the year implies that we expect year-over-year comparable sales performance to improve as we move through the year,” CFO Matthew Bilunas said on a post-earnings .