Best Buy Reports Consumer Caution as Comparable Sales Drop 10%

Best Buy sees a continuing trend of consumers feeling cautious due to the current economic environment.

The consumer electronics retailer noted this trend while reporting that its comparable sales declined 10.1% year over year during the quarter ended April 29, according to a Thursday (May 25) earnings release.

“In this environment, customers are clearly feeling cautious and making tradeoff decisions as they continue to deal with high inflation and low consumer confidence due to a number of factors,” Best Buy CEO Corie Barry said in the release.

Best Buy expects consumers to remain cautious as, looking ahead, it expects year-over-year declines in comparable sales of 6% to 8% in the second quarter and 3% to 6% in fiscal year 2024, according to the press release.

That guidance remains unchanged from last quarter, the release said.

“As a reminder, our guidance assumed the consumer electronics industry would continue to feel the pressure of the broader macro environment and a high degree of uncertainty as it relates to the consumer,” Best Buy Chief Financial Officer Matt Bilunas said in the release.

During the first quarter, the retailer’s categories that saw the greatest declines were computing, appliances, home theater and mobile phone. Categories that saw growth during the quarter included gaming and services, according to the release.

The percentage of purchases categorized as “premium” remained consistent with past quarters, the release said.

Since its last earnings report, Best Buy has made several adjustments to its operations, products and services.

On March 7, the retailer announced a partnership with Atrium Health in which “specially trained Geek Squad Agents” will assist with logistics and installation as well as tech support for the home health tech outfitting homes.

In April, Best Buy eliminated hundreds of in-store consultant roles, shifting to others the responsibility of selling computers, smartphones and other complex products.

In May, the retailer modified its membership programs and added a more affordable paid tier.

“Given the current environment, we are of course preparing for a number of scenarios within our annual guidance range,” Bilunas said in the Thursday press release. “At this point, we believe our sales align closer to the midpoint of the annual comparable sales guidance. It is still early in the year, so we will continue to watch the trends closely and adjust as necessary.”