July 28, 2022
Best Buy’s fiscal second quarter doesn’t end until July 30, but the consumer electronics retail giant has seen enough dark clouds to issue a warning about its pending fiscal results and fiscal 2023 outlook.
CEO Corie Barry said the retailer entered the year expecting its fiscal 2023 financial results to be softer than last year with the lack of ongoing government stimulus support and unusually strong consumer electronics industry demand coming out of the pandemic.
Best Buy remains a major national retailer of packaged media, including DVD, Blu-ray Disc and 4K UHD Blu-ray.
“As high inflation has continued and consumer sentiment has deteriorated, customer demand within the consumer electronics industry has softened even further, leading to Q2 financial results below the expectations we shared in May,” Barry said in a statement.
The company expects Q2 FY23 comparable sales to decline approximately 13%, with revenue approximately 7.5% higher than pre-pandemic Q2 FY20. This compares to 19.6% comparable sales growth in Q2 FY22. The company expects its Q2 non-GAAP operating income rate2 to be in a range around 3.7%. Additionally, the company expects its Q2 ending inventory balance to be approximately flat to the same period last year.
“As the macro environment continues to evolve, we are proactively managing the day-to-day operations while maintaining our focus on our long-term strategy and growth initiatives,” Barry said.
CFO Matt Bilunas said the current state of the economy makes it difficult to assess the duration of the softer sales environment and the impact on business. He said current planning assumptions for fiscal 2023 include a comparable sales decline in a range around 11% and operating income rate of approximately 4%.
“This compares to our previous guidance of a comparable sales decline of 3% to 6% and operating income rate of 5.2% to 5.4%,” Bilunas said.
In response to the current sales environment, Best Buy said it would continue to actively assess further actions to manage profitability. The retailer plans to provide additional business updates when it releases its Q2 results on Aug. 30.