By Uday Sampath Kumar
(Reuters) -Best Buy Co Inc on Thursday joined peers with a cautious annual earnings forecast as uncertainty over the U.S. economic outlook tempers expectations for a recovery in demand for TVs, laptops and other electronic products.
The company’s shares fell 2.7% despite a beat on holiday quarter revenue and profit estimates as steep discounts attracted inflation-weary shoppers to its stores.
Best Buy and other retailers have offered bigger discounts than usual during the holiday season to stoke demand as surging costs of rent and food over the last year hammered spending on non-essentials.
The company sees no relief this year, forecasting full-year comparable sales to fall 3% to 6%, compared with analysts’ estimates for a 1.9% decline.
“As we enter fiscal 2024, macroeconomic headwinds will likely result in continued volatility, and we are preparing for another down year for the (consumer electronics) industry,” Chief Executive Officer Corie Barry said on an analyst call.
The company expects fiscal 2024 adjusted earnings per share of $5.70 to $6.50, below analysts’ estimates of $6.71.
Walmart, Target Corp and other retailers have also issued conservative forecasts as still high U.S. consumer prices have raised fears that the Federal Reserve could further lift borrowing costs to cool demand.
However, Best Buy’s forecast was even more conservative than its big-box retail rivals, as it has greater exposure to discretionary categories, M Science Senior Analyst John Tomlinson said.
“Best Buy’s forecast implies things are worse than they were pre-pandemic, while trends, relative to 2019, are generally still much higher for many other companies,” Tomlinson said.
On an adjusted basis, the company earned $2.61 per share in the fourth quarter ended Jan. 28, beating analysts’ estimates of $2.11, according to IBES data from Refinitiv.
(Reporting by Uday Sampath in Bengaluru; Editing by Anil D’Silva and Sriraj Kalluvila)
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