Best Buy Sales Forecast
The company expects Q2 FY23 comparable sales1 to decline approximately 13%, with revenue approximately 7.5% higher than pre-pandemic Q2 FY20. This compares to 19.6% comparable sales growth in Q2 FY22. The company expects its Q2 non-GAAP operating income rate2 to be in a range around 3.7%. Additionally, the company expects its Q2 ending inventory balance to be approximately flat to the same period last year.
best buy sales forecast
In response to the current sales environment, the company will continue to actively assess further actions to manage profitability. From a capital allocation perspective, the company remains committed to its quarterly dividend of $0.88 per share and has paused share repurchases at this time.
From a merchandising perspective, the largest drivers of the comparable sales decline on a weighted basis were computing, home theater, appliances and mobile phones. These drivers were partially offset by growth in the gaming and tablet categories.
International RevenueInternational revenue of $1.20 billion decreased 12.2% versus last year. This decrease was primarily driven by a comparable sales decline of 5.7% and the negative impact of approximately 570 basis points from foreign currency exchange rates.
Best Buy is scheduled to conduct an earnings conference call at 8:00 a.m. Eastern Time (7:00 a.m. Central Time) on March 2, 2023. A webcast of the call is expected to be available at www.investors.bestbuy.com,both live and after the call.
The 21 analysts offering 12-month price forecasts for Best Buy Co Inc have a median target of 80.00, with a high estimate of 110.00 and a low estimate of 62.00. The median estimate represents a +6.20% increase from the last price of 75.33.
Best Buy on Tuesday forecast a smaller drop in annual sales than it had previously estimated, saying it was confident that a ramp up in deals and discounts will bring in more inflation-weary customers during the holiday season.
During the summer months, many major retailers were slashing forecasts for the holiday season with predictions of lowered discretionary consumer spending. Then it was announced that a record number of holiday shoppers had gone looking for deals on Black Friday weekend.
CEO Corie Barry spoke about the importance of sales as consumers struggle with high inflation raising the prices of everyday items. Barry noted that Across consumers, we can also see that savings are being drawn down and credit usage is going up, and value clearly matters to everyone." Best Buy also warned that discounts offered to entice customers would impact profit margins for the final quarter.
Adjusted earnings fell to $1.54 a share in the fiscal second quarter, Best Buy said in a statement Tuesday. That exceeded the $1.35 average of analyst estimates compiled by Bloomberg, which had come down sharply since the company cut its forecast for the year in late July.
Best Buy is contending with flagging sales of discretionary goods as soaring US inflation forces shoppers to pay more for groceries and other essentials. Consumers are also shifting more spending to travel and other services after binging on televisions, computers and appliances during the first two years of the pandemic.
In the second quarter, which ended in late July, sales tumbled 13% to $10.3 billion, matching analyst estimates. Enterprise comparable sales fell 12.1%, compared with an average analyst projection of a 13.1% decline.
The job cuts come after Best Buy reduced its annual sales and profit forecast late last month, citing surging inflation that has dampened consumer spending on gadgets. The Richfield-based company echoed Walmart, which a few days before cut its profit outlook. The nation's largest retailer said that higher prices on basic necessities are forcing shoppers to cut back on discretionary items .
Thank you and good morning, everyone. Joining me on the call today are Corie Barry, our CEO, and Matt Bilunas, our CFO. During the call today, we will be discussing both GAAP and non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, and an explanation of why these non-GAAP financial measures are useful, can be found in this morning's earnings release, which is available on our website investors.bestbuy.com.
Throughout the quarter, we were committed to balancing our near-term response to current conditions and managing well what is in our control, while also advancing our strategic initiatives and investing in areas important for our long-term growth. Our comparable sales were down 10.4% on a year-over-year basis. This represents 8% revenue growth over the third quarter of pre-pandemic fiscal '20, which was consistent with the growth compared to fiscal '20 that we saw last quarter. As expected, our non-GAAP operating income rate declined compared to last year due to the increased promotional environment for consumer electronics, the investments in our growth initiative, and SG&A deleverage from the lower revenue.
Our non-GAAP earnings per share was up 22% versus pre-pandemic fiscal '20. We continued to manage our inventory effectively. Our inventory at the end of Q3 was down almost 15% from the third quarter of last year. This is more than our Q3 sales decline and projected Q4 sales due to a few factors.
The shift equates to about 8% of our inventory. The promotional environment continues to be considerably more intense than last year. Like Q2, the level of promotionality in Q3 was similar to pre-pandemic levels and, in some areas, was even more promotional as the industry works through excess inventory in the channel, as well as response to softer customer demand. From a merchandising perspective, we saw year-over-year sales declines across most product categories.
Consistent with the first half of the year, the largest impacts to our enterprise comparable sales came from computing and home theater. Compared to Q3 of fiscal '20, our computing revenue remains 23% higher, and our appliances revenue remains 37% higher. Our blended average selling price, or ASP, in Q3 was down slightly on a year-over-year basis. ASPs will likely continue to be lower on a year-over-year basis as promotional activity that was largely absent during much of the pandemic has returned.
Across consumers, we can also see that savings are being drawn down and credit usage is going up. And value clearly matters to everyone. During Q3, we continue to see more interest in sales events geared at exceptional value. As a result, there is no one way to describe all customers, and we have repeatedly referred to the impacts of the current macro environment on consumers as uneven and unsettled.
While sales are down in our signature categories as we lap the strong growth of the pandemic years, our initiative to expand our presence in adjacent categories is driving sales growth. While still small overall, we are driving sales growth in e-bikes and outdoor living categories as we expand to more stores in addition to our online assortment. Outdoor furniture, in particular, is demonstrating strong growth driven by new showrooms for our Yardbird assortment, including in our Best Buy stores and new stand-alone showrooms. From a health and wellness perspective, we launched over-the-counter hearing aids last month in almost 300 stores and online, including a new online hearing assessment tool.
Volume is still relatively low, but the Q3 sales growth rate exceeded our expectations and demonstrates that customers see Best Buy as a relevant provider of these products. As you have all likely noticed, the holiday shopping season has begun. And now, more than ever, our customers are looking to bring joy back into their holiday celebration. Like we said in our last earnings call, we expect shopping patterns will look more similar to historical holiday periods than what we have seen in the last two years.
Specifically, we expect there will be more customer shopping activity concentrated on Black Friday week, Cyber Monday, and the two weeks leading up to December 25th. Our results so far in October and the first two weeks of November have come in largely as expected and support this view thus far. From an inventory perspective, we have approached holidays strategically, placing bets in areas that require a longer lead time and taking a more flexible approach in other areas. We believe this gives us more room to invest and partner with vendors that changes in demand provide additional sales opportunities.
We feel confident heading into what could be an uneven holiday season, and we have tailored our offerings to delight our customers, whatever their budget. Strategically, as we look ahead, we are positioning ourselves to lead the way in the future of retailing. This is a future where the customer is in control and expects seamless experiences across all touchpoints. It is becoming more evident every quarter that the pandemic-induced shopping behavior changes are sticky and that our digital penetration of domestic sales will likely remain above 30%.
For the first nine months of the year, our online sales as a percentage of domestic revenue were 31%, nearly twice as high as pre-pandemic. We expect that penetration rate to begin to increase again over time as it did pre-pandemic. Additionally, customer demand for other virtual interactions has remained elevated, and we have seen strong and sustained sales growth from our investments in chat, phone, and video sales experiences this year. Of course, that also means that almost 70% of customers are shopping in our stores, and customers representing 42% of our online sales pick up their products at our stores.
As such, it is imperative we continue to invest in our stores and elevate our unique experiences. One way we are doing that is with our 35,000-square-foot experience store remodel. We remain excited about these as we continue to see positive results from our longer-running Houston and Charlotte remodels, including stronger sales, increased customer penetration, and higher net promoter scores. These stores highlight broader assortment, including the opportunity to showcase the new categories I referenced earlier, and really bring them to life. 041b061a72