MINNEAPOLIS — Best Buy's profit and sales slipped in the third quarter on weakening demand for electronic gadgets, but it beat expectations and the retailer said a downturn in comparable stores sales this year will not be as bad as it had expected.
Shares jumped 7% before the opening bell Tuesday.
The Minneapolis consumer electronics chain earned $277 million, or $1.22 per share in the quarter that ended Oct. 29, or $1.38 per share adjusted for restructuring and amortization costs. That easily beat the per-share earnings of $1.03 projected on Wall Street, according to a survey by Zacks Investment Research.
The company booked $26 million in restructuring costs as it cut jobs in response to slowed spending by Americans.
Last year in the same period, the company earned $499 million, or $2 per share.
Sales fell 11% to $10.56 billion, edging out analyst expectations for $10.31 billion.
Neil Saunders, managing director at GlobalData Retail, said that double-digit percentage declines in both profit and sales would normally be cause for alarm but in this case, it was expected. Saunders, however, says weak gadget sales don’t bode well for Black Friday, which is a big sales day for retailers.
“We do not expect demand to collapse, but we expect it to be much softer than usual," Saunders said.
Best Buy’s sales during the depths of the pandemic were fueled by oversized spending from shoppers who splurged on gadgets to help them work from home or help their children with virtual learning. Government stimulus checks fueled a lot of that spending.
The company acknowledged that 2022 would be a more difficult year from the start and soaring inflation has made it even tougher as Americans take more items deemed unessential off their shopping lists.
Comparable sales— those coming from Best Buy’s stores and online— fell 10.4%, which was not as bad as had been expected.
And the company said that the trail-off in comparable stores sales for the year will not be as bad as it had projected earlier. Best Buy now expects a 10% decline in same-store sales for the year, slightly better than earlier forecasts.
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