Best Buy stock falls postmarket on disappointing outlook amid high inflation, weak demand

Jul. 27, 2022 4:31 PM ETBest Buy Co., Inc. (BBY)By: Jessica Kuruthukulangara, SA News Editor5 Comments
  • Best Buy (NYSE:BBY) stock fell 3% postmarket on Wednesday after the retailer provided disappointing Q2 guidance and slashed its 2023 outlook, citing high inflation and weak demand.
  • it expects Q2 comparable sales to fall ~13%, This compares to 19.6% comparable sales growth in Q2 FY22
  • Q2 revenue is projected to be ~$10.26B, or ~7.5% higher than pre-pandemic Q2 FY20. That is well below consensus estimate of $10.83B.
  • BBY expects Q2 adj. operating income rate to be ~3.7%.
  • The retailer also projected Q2 ending inventory balance to be approx. flat to the year-ago period.
  • "As high inflation continued and consumer sentiment deteriorated, demand in the consumer electronics industry softened even further, leading to Q2 results below the expectations we shared in May," said BBY CEO Corie Barry.
  • BBY also slashed its 2023 guidance, citing macro headwinds, SG&A cost deleverage on the reduced sales outlook, and additional gross profit rate pressure from increased promotional activity in consumer electronics.
  • The retailer expects 2023 comparable sales decline of ~11% and adj. operating income rate of ~4%.
  • Its prior guidance was of a comparable sales decline of 3-6% and adj. operating income rate of 5.2-5.4%.
  • BBY will continue to assess further actions to manage profitability in response to the current sales environment.
  • The firm remains committed to its quarterly dividend of $0.88/share and has paused its stock buybacks.

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