Best Buy says cooling consumer demand for appliances helped drive down third-quarter sales.
The company’s drop in revenue led it to lower its annual sales forecast Tuesday (Nov. 21), three days before Black Friday ushers in the crucial holiday shopping season.
“In the more recent macro environment, consumer demand has been even more uneven and difficult to predict,” CEO Corrie Barry said in a third-quarter earnings news release. “Based on the sales trends in Q3 and so far in November, we believe it is prudent to lower our annual revenue outlook.”
According to the company’s earnings report, domestic revenue was $9 billion, down 8.2% from last year, fueled by a comparable drop in sales of 7.3%. Domestic online revenue — $2.75 billion — fell 9.3% on a comparable basis.
“From a merchandising perspective, the largest drivers of the comparable sales decline on a weighted basis were appliances, computing, home theater and mobile phones,” the release said. “These drivers were partially offset by growth in gaming.”
The news comes ahead of a holiday season in which consumers are likely to reduce their spending, though not skimp on gifts, according to recent PYMNTS intelligence findings.
“Consumers plan to spend significantly less this holiday season — 26% less,” PYMNTS wrote Tuesday, citing research from “The Credit Economy: How Consumers Are Approaching Holiday Spending and Travel,” a PYMNTS Intelligence and i2c collaboration.
That report also notes that an expected 2.2% increase in gift spending shows an effort by consumers to retain core holiday traditions despite financial pressures.
According to the report, the average holiday shopper also expects to spend roughly $860 this year on holiday purchases such as live entertainment or retail goods for personal use — down from $1,160 in 2022, while spending on gifts will average about $1,000, a modest increase.
And as reported here last week, there have been a number of recent indications that consumers are feeling stressed ahead of the holidays, with both Target and Walmart noting a decline in spending among their shoppers.
Target CEO Brian Cornell said on his company’s earnings call that “overall, consumers are still spending, but pressures like higher interest rates, the resumption of student loan repayments, increased credit card debt, and reduced savings rates have left them with less discretionary income, forcing them to make trade-offs in their family budgets.”