Best Buy cuts forecast while sales fall less than feared

Best Buy’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 fell less than expected, while a moderate increase in inventories contrasted with the surges that prompted markdowns at Walmart and Target.

The results offered investors a measure of relief as U.S. 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 U.S. 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.

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%.

Specialized retailers like Best Buy appear to be faring better than the big discounters and department stores whose weak results roiled markets last week.