Americans may leave their end-of-year holiday gift buying as late as possible, Best Buy Co Inc BBY-N executives said on Tuesday, as cost-conscious consumers seek the best deals in a return to pre-pandemic shopping habits.
Global supply-chain disruptions and the resultant shortages prompted consumers to start their holiday shopping as early as October in the last two years on fears that in-demand products would disappear from the shelves by the traditional period around Thanksgiving in late November.
This year, however, retailers are holding excess inventories as customers cut back on discretionary spending, and Best Buy expects this to fuel a return to pre-pandemic shopping patterns.
“Our hypothesis is you are going to see a holiday that starts to look a little bit more like what we saw pre-pandemic. Maybe comes a little bit later and is probably promotional in our space,” Chief Executive Corie Barry said on an earnings call.
Barry added customers were trading down in categories such as televisions and expected the trend to extend into the holidays. It, however, saw pricey smartphone sales holding strong ahead of the latest iPhone launch.
The electronics retailer reported a smaller-than-expected drop in quarterly comparable sales, sending its shares up about 5 per cent. The company had rolled out steep discounts to counter the slump in demand for discretionary products due to the rising cost of living.
Comparable sales decreased 12.1 per cent, compared with analysts’ estimates of a 12.6 per cent fall, according to Refinitiv data.
Inventories declined to $6.04-billion at the end of the second quarter, from $6.26-billion at the end of April.
“(The fall in inventories) stands in stark contrast to the inventory overload that many other retailers have been forced to deal with. This should imply less markdown pressure as we get towards the holiday selling season,” Truist Securities analyst Scot Ciccarelli said.
On an adjusted basis, the company earned $1.54 per share, beating estimates of $1.27.
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