Best Buy CEO sees bottom in tech demand, with a turn higher later this year

By Tomi Kilgore

Whether it's a recession or not, Barry sees consumers 'exhibiting some recessionary behaviors'

Best Buy Co. Chief Executive Officer Corie Barry said Thursday that while some consumers have been behaving as if there's a recession, she sees demand for technology products bottoming, with a turn higher likely in the second half of this year.

It's about time. Barry noted in a post-earnings conference call with analysts that she started talking about seeing a pullback in demand back in the first quarter of 2022, much earlier than others.

"[I] think what we would say is we've been seeing a consumer who is, whether or not you call it a recession, exhibiting some recessionary behaviors, depending on the different category that you're talking about," Barry said, according to an AlphaSense transcript of the call.

"So we're going to have now two consecutive years as we talked about, of a consumer who's making some choices away from consumer electronics," she added.

Barry's comments came after the consumer-electronics retailer (BBY) reported before the opening bell a fiscal first-quarter profit that topped expectations but revenue that dropped 11.1% from a year ago to just below analyst expectations, along with same-store sales that fell 10.1%.

The good news is, there are signs suggesting the worst may have passed.

Chief Financial Officer Matt Bilunas said on the call that revenue-growth trends during the first three weeks of the current quarter improved from April. That led to the company's guidance that the decline in same-store sales will narrow to 6%-8% in the second quarter.

And CEO Barry said a number of industry consultants the company uses, such NPD Group, CTA consultants and Forrester Research, are seeing the same thing.

"Based on what we see right now, we continue to believe that calendar 2023 will be the bottom for the decline in tech demand," Barry said.

"I think as we look ahead, we start to feel like you see the turn in the business as you head out the back half of this year and into next year," she added.

Best Buy's stock bounced 3.1% to close Thursday at $71.28, after closing the previous session at a six-month low. It has dropped 11.1% year to date, while the SPDR S&P Retail exchange-traded fund (XRT) has slipped 3.9% and the S&P 500 has gained 8.1%.

-Tomi Kilgore

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05-26-23 0835ET

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