Best Buy expects declining tech sales to hit a low this year before stabilizing, in another sign of consumer caution around discretionary spending and retail purchases.
The consumer electronics store said Tuesday that it is lowering the high end of its forecast for this year, even though it beat its own expectations in the second quarter of fiscal year 2024, the 13 weeks ending on July 29.
"Today we are reporting second quarter sales results that are at the high-end of the outlook we shared in May and profitability that was better than expectations," Corie Barry, Best Buy CEO, said in a statement Tuesday discussing the quarter's financial results.
"With that said, we continue to expect that this year will be the low point in tech demand after two years of sales declines," she said.
For fiscal year 2024, the company now expects revenue of $43.8 billion to $44.5 billion, instead of $43.8 billion to $45.2 billion as it said in previous guidance. It expects sales at stores, websites and call centers open at least 14 months, known as comparable sales, to decline 4.5% to 6% for the year. Previously, it had anticipated a decline of 3% to 6%.
Demand has fallen in recent years after consumers bought up devices during the pandemic, noted Barry during an analyst call Tuesday. Now, people are spending on travel and entertainment, she said, or pulling back altogether because of inflation.
In the quarter, comparable sales fell 6.3% domestically, year-over-year. Revenue fell 7.1% to $8.89 billion domestically in that time.
Globally, comparable sales dipped 5.4%, and revenue declined 8.8% to $693 million.
Still, Barry is optimistic about the future.
"We believe next year, the consumer electronics industry should see stabilization and possibly growth driven by the natural upgrade and replacement cycles for the tech brought early in the pandemic and the normalization of tech innovation," she said.
Barry pointed to gaming, home theaters and phones as possible growth categories.
Other retailers have also seen their sales fall in recent quarters.
Target's sales at stores open for at least one year dropped 5.4% last quarter, including a 10.5% drop online, the company said this month. Target also cut its annual sales forecast. And Home Depot's sales dropped 2% during its latest quarter as consumers scaled back big home projects.
— CNN's Nathaniel Meyersohn and Anna Bahney contributed to this report.
