Best Buy's stock slides as retailer lowers guidance to reflect uncertain environment

By Ciara Linnane

Same-store sales fell 6.9% amid softness in appliances, computing, home theater and mobile phones

Best Buy Co. Inc.'s stock (BBY) fell 2.7% Tuesday, after the electronics retailer posted weaker-than-expected third-quarter revenue and lowered guidance to reflect a choppy and uncertain environment.

Chief Executive Corie Barry said profitability was better than expected but revenue lagged.

"In the more recent macro environment, consumer demand has been even more uneven and difficult to predict," Barry said in a statement. "Based on the sales trends in Q3 and so far in November, we believe it is prudent to lower our annual revenue outlook."

On a call with analysts, Barry said the consumer is still spending but is picky and making trade-offs where they can, he said. And there is still a preference for services, such as restaurants, concert tickets and vacations, she said.

Lowe's CEO Marvin Ellison made similar comments on Tuesday on his company's earnings call. Both Lowe's and Home Depot are seeing pressure on big-ticket discretionary items.

See: Home Depot says 'the worst of the inflationary environment is behind us,' but prices have settled unevenly

Best Buy posted net income of $263 million, or $1.21 a share, for the quarter, down from $277 million, or $1.22 a share, in the year-earlier period. Adjusted per-share earnings came to $1.29, ahead of the $1.19 FactSet consensus.

Revenue fell to $9.756 billion from $10.587 billion a year ago, below the $9.897 billion FactSet consensus.

Enterprise same-store sales fell 6.9%, while FactSet was expecting a 5.7% decline.

The same-store sales decline in the quarter was driven by appliances, computing, home theater and mobile phones, and was partially offset by growth in gaming.

Best Buy is now expecting full-year revenue to range from $43.1 billion to $43.7 billion, compared with prior guidance of $43.8 billion to $44.5 billion. It expects adjusted EPS of $6.00 to $6.30 vs. prior guidance of $6.00 to $6.40.

Same-store sales are expected to fall 6.0% to 7.5%, compared with prior guidance for a decline of 4.5% to 6.0%.

For the fourth quarter, it expects same-store sales to fall 3% to 7%, while FactSet is expecting a 1.5% decline.

The stock has fallen 15% in the year to date, while the S&P 500 has gained 18%.

-Ciara Linnane

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11-21-23 1137ET

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