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Best Buy sees lower sales of TVs and computers as inflation hits shoppers’ wallets

A person walks into a Best Buy store in Manhattan, New York, U.S., November 22, 2021. REUTERS/Andrew Kelly

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May 24 (Reuters) – Best Buy Co Inc (BBY.N) cut its full-year profit forecast on Tuesday due to weaker demand for TVs and computers, making it the latest major retailer to highlight the impact of high inflation for 40 years on buyers. purchasing power.

Shares of the company, which fell more than 16% last week in broader retail, rose about 2% as the electronics seller reported first-quarter sales that weren’t as bad as expected. Read more

“We believe investors had largely anticipated the shortfall and reduced guidance following reports of similar difficulties at other retailers,” said Jason Benowitz, senior portfolio manager at Roosevelt Investment. Group.

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A price spike for everything from toothpaste to gasoline is weighing on consumer spending, while pushing companies including Best Buy, Walmart Inc (WMT.N) and Target Corp (TGT.N) to report their worst missed earnings for at least five years.

“Electronics is a highly discretionary and expensive item. This puts it squarely in the crosshairs of households looking to cut spending,” said Neil Saunders, chief executive of GlobalData.

Best Buy reported earnings of $1.57 per share, missing estimates of $1.61, according to Refinitiv IBES data, with the company saying it was forced to cut more than expected in some product categories to eliminate inventory.

Adjusted earnings guidance for 2023 was reduced to a range of $8.40 to $9 per share from a range of $8.85 to $9.15.

Yet even with rising gas and food prices, rising interest rates and the war in Ukraine all affecting consumer behavior, Best Buy is not currently anticipating a full recession, the company said. general manager Corie Barry on a call with analysts.

Comparable quarterly sales fell 8%, but beat tempered expectations of a 9.1% decline. It expects full-year comparable sales to fall 3% to 6% from its previous forecast of a 1% to 4% decline.

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Reporting by Uday Sampath in Bangalore; Editing by Anil D’Silva

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