Best Buy (BBY) says the slump in electronics demand has bottomed out.
After a 10% decline in comparable sales in the first quarter, Best Buy sees a gradual improvement over the last nine months of the year. The company reaffirmed its outlook for a mid-single-digit decline in full-year sales.
“Our outlook for the year is that we expect year-over-year performance improvement throughout the year to outpace the comparable sales decline experienced last year,” said Cory Barry, CEO of Best Buy. ,” he said at the company’s earnings call. “Based on what we know so far, we continue to believe 2023 will be the bottom of the decline in technology demand.”
The tech retailer has struggled over the past few quarters to compare to sales from the pandemic boom. Negative comparative sales growth in the most recent quarter marks the seventh consecutive quarter of decline in the category.
Still, Bloomberg consensus data show Best Buy’s first-quarter adjusted earnings per share were $1.15 versus analysts’ expectations of $1.11, surprising Wall Street and boosting earnings. I let The company posted $9.47 billion in quarterly sales, short of Street’s $9.54 billion estimate.
Shares of Best Buy were up as much as 3% on Thursday before the rally.
Best Buy has seen sharp declines in sales within its home appliances and consumer electronics categories, keeping pace with slowing discretionary spending noted by Target (TGT) and Home Depot (HD). On a conference call, Mr. Barry said he had been discussing decisions over the past nine months that consumers were “obviously making trade-offs.”
“What we can say is that whether we call it recession or not, we’ve seen consumers exhibiting recessionary behavior depending on the different categories we’re talking about,” Barry continued. “So this is quite unusual. Looking ahead, I think we will start to feel like we are starting to see a tipping point for the business in the second half of this year and into next year.”
But Best Buy expects things to turn around this year, largely due to the cyclical nature of its products. According to Barry, consumers say he upgrades or replaces technology over a period of three to seven years, and in the second half of this year he’s been three years since upgrades made in the wake of the pandemic in the second half of 2020. increase.
According to Best Buy, more innovative products will be released in the second half of this year. The company cited the recent success of the Zelda software on Nintendo Switch and pre-orders for the ASUS handheld “better than expected” as signs that consumers are still responding positively to the new product. pointing out.
Best Buy also sees an artificial intelligence boom aimed at improving efficiency. This retailer is deploying AI to streamline the organization’s ability to summarize calls and identify trends in consumer complaints.
“This new feature allows agents to focus fully on the customer during a call, allowing them to spend less time between calls, reducing overall costs and increasing agent satisfaction,” said Barry. said.
Josh is a reporter for Yahoo Finance.
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