Best Buy (BBY) -) shares jumped higher Tuesday after the electronics retailer posted stronger-than-expected second-quarter earnings but trimmed its full-year sales forecast amid what it sees a trough in consumer demand.
Non-GAAP earnings for the three months ended in July fell 21% from a year earlier to $1.22 a share but topped Wall Street forecasts of $1.07. Group revenue fell 7.2% $9.58 billion, narrowly besting analysts' forecasts of a $9.52 billion tally. Same-store sales tumbled 6.2% from last year
Looking into the 2024 financial year, which ends in February, Best Buy same-store sales are likely to fall by between 4.5% and 6%, compared with its prior forecast of declines in the 3% to 6% range. Overall revenue is pegged between $43.8 billion and $44.5 billion, with the top end of the estimated range lowered from its prior forecast of $45.2 billion.
The company sharpened its estimate of non-GAAP diluted earnings to a range of $6 to $6.40, compared with prior guidance of $5.70 to $6.50.
“Our financial results were better than expected, and they reflect a consumer electronics industry that remains challenged due to the pull-forward of demand in prior years and the various macroeconomic factors that we are all too familiar with,” said Chief Executive Corie Barry.
“With that said, we continue to expect that this year will be the low point in tech demand after two years of sales declines," Barry added.
"Next year the consumer electronics industry should see stabilization and possibly growth driven by the natural upgrade and replacement cycles and the normalization of tech innovation."
Best Buy shares were marked 5.5% higher in early Tuesday trading immediately following the earnings release to change hands at $78.13 each.
Last month, Apple reported a 1.4% decline in overall revenue to $81.8 billion, with iPhone sales down 2.5% to $39.67 billion over the three months ended in June.
Best Buy, which relied on discounts to offset a bigger-than-expected slump in same-store sales over the April quarter, had held to its full-year revenue forecast of between $43.8 billion and $45.2 billion, with earnings in the region of $5.70 to $6.50 per share.
Chief Financial Officer Matthew Bilunas indicated improved prospects for the back half of the year.
Crispidea analyst Aishwarya Dinesh said Best Buy "is expanding into new areas like wellness tech and electric transport. They've faced sales declines due to changing trends and economic pressures. Challenges might continue, but growth is expected over time due to tech upgrades and trends."
Dinesh carries an overweight rating and $86 price target on Best Buy stock.
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