According to Best Buy Co. Chief Executive Officer Corie Barry, she is seeing the electronics market steadying and forecasts potential growth for 2024 when the results are released, which led to the company’s stock rising.
The retailer’s reported results said total similar sales are likely to be “slightly better” in the third quarter than the 6.2% decrease in the second, and the fourth quarter will also perform better with a potential slight increase.
“Next year the consumer electronics industry should see stabilization and possibly growth driven by the natural upgrade and replacement cycles and the normalization of tech innovation,” Barry said.
Best Buy Co. Chief Executive Officer Corie Barry
The improvement in sales signals that brighter days are coming for Best Buy from the deep slump they saw last year after the pandemic splurge purchases receded.
“Despite sluggish discretionary spending, we think that we are getting closer to cycling all of the Covid-related pull forward that essentially started 3.5 years ago,” Truist Financial Corp. analyst Scot Ciccarelli said.
After results were released, shares rallied to 5.5% after reaching as high as 6.1%, which was the most significant intraday gain since November 22nd although Best Buy did slide 7.7% in 2023, while the S&P 500 index advanced 15%, according to Bloomberg.
Despite a better electronic market outlook, Neil Saunders, managing director of GlobalData, says to hold off on buying those big-spend purchases.
“Best Buy’s view that demand will start to strengthen as the company moves into next year is possible, but perhaps a shade optimistic,” he said.
In contrast, Barry shared that TV sales growth has steadied, as have laptop-computer sales, and with new video game releases, their revenue could see a nice boost from the gaming segment.
“That is a pretty material trajectory change from what we had seen before,” she said.
Additionally, Barry suggested U.S. consumers are “in a good place” but could be more discerning regarding what they spend their money on, which means shoppers will be scouting the market for deals during the holidays.
Best Buy has modified earlier projected earnings of $6 to $6.40 a share, and at the midpoint, that was 10 cents better than the last outlook.
With Best Buy attributing most of its profits from the U.S., the company said total comparable sales would fall by 4.5% or more, worse than the decline of at least 3% predicted in May.
According to Bloomberg, the measure dropped about 8% from January to June 2023.
