Best Buy Co. Inc. (BBY) reported its third-quarter results, noting that both adjusted earnings and revenues fell short of market expectations. On Tuesday, the retailer projected stagnant or declining comparable sales for the upcoming fourth quarter and revised its fiscal 2025 forecast downward, falling below market predictions.
Ahead of the NYSE opening, Best Buy shares had dropped approximately 7.4%, trading at $86.11.
CEO Corie Barry indicated that several factors led to lower-than-anticipated demand during the latter part of the quarter. These included ongoing macroeconomic uncertainties, customer delays in purchasing, anticipation of sales events, and distractions caused by the pre-election period, particularly affecting sales in non-essential categories. However, Barry noted a resurgence in customer demand in the initial weeks of Q4, coinciding with the commencement of holiday sales and the conclusion of election-related activities.
For the fourth quarter, Best Buy anticipates that comparable sales will range from flat to a decrease of 3% compared to the previous year. The company expects its adjusted operating income margin to lie between 4.6% and 4.8%.
Looking ahead to fiscal year 2025, Best Buy now forecasts adjusted earnings per share to range from $6.10 to $6.25, with previous guidance indicating a range of $6.10 to $6.35. Annual revenue projections have been adjusted to $41.1 billion to $41.5 billion, down from the earlier forecast of $41.3 billion to $41.9 billion.
According to Thomson Reuters, analysts on average had predicted earnings of $6.27 per share with sales totaling $41.58 billion. These analyst estimates commonly exclude special items.
The company now anticipates an annual decline in comparable sales of 2.5% to 3.5%, a steeper drop than its earlier guidance of a 1.5% to 3% decrease. However, Best Buy has retained its projection for adjusted operating income margin at 4.1% to 4.2%, suggesting a slight improvement from FY24 on a 52-week basis.
For the third quarter, Best Buy reported net earnings of $273 million or $1.26 per share, a rise from the $263 million or $1.21 per share recorded in the previous year. Adjusted earnings stood at $1.26 per share, slightly below the expected $1.29 per share from analysts. Revenue for the quarter declined by 3.2% to $9.445 billion from $9.756 billion in the prior year, missing the market's expectation of $9.63 billion.
