Best Buy said Wednesday that inflation and slipping demand for electronics led to lower sales this summer than it expected just a few months ago.
Company executives said they now expect comparable sales — those at stores open at least a year — to have dropped 13% during the May-through-July quarter that ends Saturday. They had expected an 8% drop, about the same decline seen in the February-through-April period.
"As high inflation has continued and consumer sentiment has deteriorated, customer demand within the consumer electronics industry has softened even further," Best Buy CEO Corie Barry said in a statement.
Richfield-based Best Buy is coming off a difficult comparison. A year ago, the company's comparable sales jumped about 20% in the summer quarter. Best Buy said its latest quarterly performance will still outpace pre-pandemic numbers.
The announcement came after market close and pushed Best Buy's stock down about 2% in after-hours trading. Its shares rose 3.4% in regular trading Wednesday, in line with gains in the broader market as investors absorbed the Federal Reserve's latest interest rate hike.
For the full year, Best Buy said comparable sales could be down around 11%, a steep drop from executives' previous forecast decline of 3 to 6%.
On Monday, Walmart lowered its profit outlook for the just-finishing quarter and the full year, also citing inflation and reduced discretionary shopping.
Best Buy is in a further precarious position as it doesn't sell many items that are considered necessities. It counts on being one of the few specialty retailers where customers can get a full range of electronics for every part of the home.
But the company appears to have avoided the inventory bloat that is affecting other national retail chains. Best Buy said Wednesday that it expects to end the quarter with inventory value that is flat compared with a year ago.
Separately, executives at Minneapolis-based Sleep Number lowered their outlook and expect a "high single-digit demand decline" in the year's second half.
The company is working through a backlog of orders for high-end smart beds, and executives still expect low single-digit sales growth for 2022. But they cut the profit forecast from $5 to $6 a share to $3 to $4 a share.
"We are taking prudent actions to preserve liquidity and financial flexibility," CEO Shelly Ibach said in a statement.
For the quarter ended June 30, Sleep Number earned $1.54 a share, up 75% from a year ago. Revenue grew 13% to $549 million. Shares of Sleep Number fell about 6% in after-hours trading Wednesday.
