Best Buy (BBY) earnings Q3 2023

A customer watches as Best Buy employees load his new television into his car during the state’s sales tax free weekend, which begins Saturday.

Erin Clark | Boston Globe | Getty Images

best buy on Tuesday beat Wall Street’s expectations for quarterly earnings as inflation-driven demand for expensive consumer electronics came in better than feared.

The electronics retailer, which lowered its forecast in the summer, reiterated its outlook for the Christmas quarter. It raised its full-year guidance to reflect the hit and said it expects comparable sales to fall about 10%.

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Shares of the company are up more than 9% in premarket trading on Tuesday.

Here’s how the retailer has fared in the three months ended Oct. 10. 29 compared to what Wall Street was expecting, according to a survey of Refinitiv analysts:

  • Earnings per share: $1.38 adjusted vs. $1.03 expected
  • Revenue: $10.59 trillion vs. $10.31 trillion expected

While Best Buy’s quarterly results came in better than expected, demand has slowed since the peak of the pandemic, when consumers shopped for home theaters, computer monitors, kitchen appliances and more in stores while working, gaming and cooking at home.

Net sales for the fiscal third quarter decreased approximately 11% year over year in the third quarter of $11.91 billion. Net income fell to $277 million, or $1.22 per share, from $499 million, or $2 per share, a year earlier.

CEO Corie Barry said Christmas shopping patterns are also shifting to a more typical pre-pandemic pattern. In a press release, she said the retailer expects customers to spend more on Black Friday, Cyber ​​Monday and the two weeks leading up to Christmas.

Best Buy faces a more uncertain selling environment this holiday season. Some inflation-cheated consumers are pulling away from consumer goods and spending more on necessities and experiences. The company joined other retailers in trimming its outlook this summer. It said at the time that same-store sales were expected to fall by about 11% for the 12-month period ended January.

A month after Best Buy warned of slower sales, jobs were cut across the country.

But so far, the company has exceeded its own expectations.

Comparable sales fell 10.4%, less than the 12.9% analysts were expecting, according to FactSet. Also known as same-store sales, the key metric tracks sales online and in stores that have been open for at least 14 months.

It was also a smaller drop than the retailer was expecting. Best Buy hadn’t provided specific guidance for comparable sales in the third quarter, but its chief financial officer Matt Bilunas had warned that the company would decline more than 12.1% in the second quarter.

The company said it has resumed share buybacks, which it paused when it withdrew its guidance in July. Best Buy plans to spend about $1 billion on share buybacks this year.

Barry said the company is tightly controlling its inventory, which is down 14.7% year over year. The retailer anticipated a drop in demand, overtaking the period a year ago when deliveries were both early and late due to supply chain challenges.

Inventory is a closely watched metric in the retail industry as many businesses have had to deal with a deluge of unwanted merchandise and have had to reduce items, cancel orders or pack and store goods.

Best Buy shares are down about 30% so far this year, underperforming the S&P 500 Index. Shares closed at $70.83 on Monday, down almost 2%. The company’s market value is $15.95 billion.

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