By Scott Kanowsky
Investing.com -- Best Buy Co Inc (NYSE:BBY) warned of a fall in sales and profit in its current financial year, as the consumer electronics chain faces inflation-driven caution in customer spending habits and higher costs.
The Minnesota-based retailer said it now expects revenue for its fiscal 2024 period to decline by between 3% to 6% compared to the prior year. Much of the slump in sales will come in the first quarter, Best Buy flagged, due to a tough annual comparison caused by a surge in expenditures on items like computers and televisions during the pandemic. Those difficult comparisons are now projected to ease in the upcoming quarters, Best Buy added.
When not adjusted for GAAP accounting standards, diluted earnings per share for the 53-week period from January 29 is also seen coming in at between $5.70 to $6.50, down from $7.08 in the 2023 fiscal period.
Best Buy noted that the extra week in the 2024 fiscal year is anticipated to add about $700M in revenue to the final quarter and boost its non-GAAP operating income rate by approximately 10 basis points. But the added week, as well as elevated depreciation and incentive compensation, are also projected to lead to an uptick in expenses.
“We believe the macro and industry backdrop will continue to be pressured in FY24 and we will continue to adjust,” Chief Executive Corie Barry said in a statement on Thursday.
The company has recently seen demand trend lower as soaring inflation leads some shoppers to rein in spending, with Barry previously calling customers "uneven and unsettled" heading into the new year.
In the three months to January 28, enterprise comparable store sales slumped by 9.3% year-on-year. However, the figure was still better than Bloomberg consensus estimates for a decrease of 9.46%
Analysts at Goldman Sachs said the softer outlook is likely influencing shares in Best Buy despite the beat on store sales. The stock fell in premarket trade on Thursday.