(Bloomberg) — Best Buy Co.’s first-quarter revenue surpassed analyst estimates but the company wasn’t able to avoid joining the litany of retailers cutting outlooks for the year.
Revenue fell 8.5% to $10.6 billion in the three months ended in late April, Best Buy said in a statement Tuesday.
That exceeded the $10.4 billion average of analyst estimates. Same-store sales also declined less than expected, while a moderate increase in inventories contrasted with the surges that prompted markdowns at Walmart Inc.
and Target Corp.
The results offered investors a measure of relief as US retailers struggle to shore up profit while costs soar and consumers grapple with the highest inflation rates in four decades.
While the quarter was expected to be weak as the US economy lapped an injection of government stimulus in early 2021, Best Buy dodged the sharp earnings deterioration suffered by some other retail chains.
“Even with the expected slowdown this year, we continue to be in a fundamentally stronger position than we were before the pandemic from both a revenue and operating income rate perspective,” Chief Executive Officer Corie Barry said in the statement.
Best Buy rose 0.1% at 9:42 a.m.
in New York. The shares had fallen 29% this year through Monday, while an S&P 500 index of consumer-discretionary stocks declined 31%.
The worsening economic backdrop prompted Best Buy to cut its annual forecast for earnings, revenue and same-store sales.
The company also revised its outlook for operating profit to between 5.2% and 5.4% of sales, down from the previous prediction of 5.4%. On a call with analysts, Barrie said she expected “elements of soft demand” this year but not a full-on US recession.
“We think investors were bracing for an even larger outlook reduction,” Scot Ciccarelli, an analyst at Truist Securities, said in a note to clients.
“However, with such a modest reduction, we suspect investors will be asking, ‘Is that enough?’”
Specialized Retailers
In the first quarter, adjusted earnings fell to $1.57 a share, trailing the $1.60 average of analyst estimates compiled by Bloomberg.
Comparable sales fell 8%, while analysts had expected a 9.4% drop.
Specialized retailers like Best Buy appear to be faring better than the big discounters and department stores whose weak results roiled markets last week.
Petco Health and Wellness Co. posted stronger-than-expected adjusted earnings and sales on Tuesday, causing its shares, which had been heavily shorted by investors, to gain as much as 7.5%.
Similarly, AutoZone Inc.
shares got a boost when comparable sales in its just-ended third quarter were stronger than Wall Street expected. Investors recently have been betting against the stock, which was down 14% this year through Monday’s close.
(Updates with analyst comment in seventh paragraph.)
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
