Best Buy lifts annual profit forecast as tighter cost controls pay off

Reuters

Best Buy lifts annual profit forecast as tighter cost controls pay off

2024 8월 29 일, 오전 11:07 GMT

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Adds analyst comment in paragraph 9

By Juveria Tabassum

Aug 29 (Reuters) -Best Buy BBY.N raised its annual profit forecast after topping second-quarter earnings expectations on Thursday, as tighter controls on costs help the electronics retailer offset the impact from steeper discounts and promotions across categories.

Shares of the company were up 7% in premarket trading.

Best Buy refreshed its membership program last year and trimmed jobs as part of a restructuring plan, in a bid to help margins in the midst of softer demand at its stores as shoppers deferred spending on pricier electronics.

"We see a consumer who is seeking value and sales events, and one who is also willing to spend on high-price-point products when they need to, or when there is new compelling technology," Chief Executive Officer Corie Barry said.

The company expects adjusted earnings per share for fiscal year 2025 to be between $6.10 and $6.35, compared with the earlier per share forecast of $5.75 to $6.20.

Best Buy alsoreported a smaller-than-expected drop in second-quarter comparable sales, which fell 2.3% compared with expectations of a drop of 3.2%, according to LSEG data.

Consumers in the United States looked to upgrade their laptops and tablets during the summer after several quarters of keeping a tight lid on spending on expensive electronics.

Best Buy also benefited from demand for newer features such as Microsoft's AI-powered Copilot+ PCs during the reported quarter.

"As promised, tablets and computing performed well as consumers look to upgrade and have more powerful devices to handle AI capabilities," said Joe Feldman, analyst at Telsey Advisory Group, noting that these key back-to-school categories were positive in the reported quarter.

The company's domestic gross profit rate grew to 23.5% in the second quarter from 23.1% last year.

Excluding items, it reported second-quarter earnings per share of $1.34, beating an estimate of $1.16.

Reporting by Juveria Tabassum; Editing by Pooja Desai

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