Best Buy CEO Forecasts a Bottom in Tech Demand

Best Buy Co. Inc. Chief Executive, Corie Barry, is confident in her prediction that the current year will mark the low point in tech demand after two years of sales declines. In a recent post-earnings conference call with analysts, Barry reiterated her belief, which she initially expressed in May after the fiscal first-quarter results, and again in March after the fourth-quarter results. However, despite her optimistic outlook, Best Buy has slightly lowered its full-year revenue forecast.

Revised Revenue Outlook

According to the company’s latest announcement, Best Buy now expects its fiscal 2024 revenue to be in the range of $43.8 billion to $44.5 billion, down from the previous guidance of $43.8 billion to $45.2 billion. The midpoint of this revised range stands at $44.15 billion, representing a decline of 4.6% compared to the previous year. This figure falls below the current FactSet consensus estimate of $44.25 billion.

Reasons for Lower Consumer Demand

Barry attributes the ongoing lower consumer demand in the tech industry to several factors. Firstly, she highlights the impact of the pandemic, which led to a surge in tech purchases followed by a shift towards spending on services outside the home, such as travel and entertainment. Additionally, the resumption of student loan payments in October is expected to add further pressure on consumer spending decisions. Lastly, persistent inflation has also influenced the financial choices of a significant portion of the population.

Growth Expectations for Fiscal Year 2025

Looking ahead to fiscal 2025, analysts predict a modest 0.5% growth in revenue compared to the guidance midpoint. The FactSet consensus forecast for this period is $44.39 billion, indicating a slight improvement.

Positive Market Response

The news of Best Buy’s optimistic outlook and solid financial performance has had a positive impact on the company’s stock. In morning trading, the stock soared by 5.8%, outperforming the S&P 500 index. Best Buy exceeded expectations for profit, revenue, and same-store sales in the fiscal second quarter, prompting an upward revision of its full-year profit forecast. This surge represents the largest one-day gain since November 22, 2022, when the stock rose by a notable 12.8%.

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