Best Buy reported lower sales for its fiscal first-quarter and the retailer cut its outlook for the year, citing softer demand that doesn’t appear to be letting up.
“That trend has continued into the beginning of Q2 and it does not appear that it will abate in the near term,” Best Buy CEO Corie Barry said on an analyst call Tuesday.
The economic landscape has worsened since the company provided guidance at an investor day earlier this year. But while Best Buy is factoring that into its outlook, Barry said the company isn’t “planning for a full recession.”
Even as consumers watch their budgets, she said, Best Buy is selling merchandise that has become more central to their lives. Sales in the company’s fiscal first quarter didn’t decline as sharply as Wall Street had expected.
“Consumer electronics over time is a stable industry,” Barry said. “The last two years have clearly underscored the importance of tech in people’s lives, so I think it’s important for us to have that as a backdrop.”
The company’s shares were up more than 1% in afternoon trading after rising about 9% before the market opened.
Here’s how the retailer did in the three-month period ended April 30 compared with what Wall Street was anticipating, according to a survey of analysts by Refinitiv:
- Earnings per share: $1.57 adjusted vs. $1.61 expected
- Revenue: $10.65 billion vs. $10.41 billion expected
Best Buy said it now anticipates full-year revenue ranging between $48.3 billion and $49.9 billion, compared with a prior outlook of $49.3 billion to $50.8 billion. It said same-store sales will decline between 3% and 6%, a bigger drop than the 1% to 4% decrease it previously forecast. It expects adjusted earnings per share in a range of $8.40 to $9.00, down from the prior outlook of $8.85 to $9.15.
Best Buy’s quarterly net income fell to $341 million, or $1.49 per share, down from $595 million, or $2.32 per share, a year earlier. Excluding items, it earned an adjusted $1.57 per share.
Net sales fell to $10.65 billion from $11.64 billion a year earlier.
Same-store sales for Best Buy declined by 8% versus the year-ago period, a better performance than the 8.6% drop that analysts expected, according to FactSet.
Chief Financial Officer Matt Bilunas cited weaker computing and home theater sales for most of the decline. Comparable sales for services fell 12% in the fiscal quarter, he said, as customers joined Best Buy’s membership program Totaltech and got warranties and installations included in the annual fee.
Scouring for clues about the consumer
Investors have scoured retailers’ earnings for clues about the health of the American consumer amid soaring inflation. With Best Buy, some worried the company would be particularly vulnerable. It faced tough comparisons against a year-ago quarter of Covid pandemic-fueled demand for computer monitors, kitchen appliances and more. That caused same-store sales to jump in that period by 37.3%.
Best Buy also told Wall Street at an investor day in March that sales would cool after two years of elevated demand. But Bilunas said at the time that the company anticipated demand above pre-pandemic levels over the next several years.
Walmart‘s and Target‘s earnings reports heightened investors’ unease last week. Both big-box retailers reported sales growth in the fiscal first quarter, but missed Wall Street’s earnings expectations as fuel and freight costs ate into profits and demand for higher margin, discretionary purchases sank. Target CEO Brian Cornell said customers skipped over bulky items like TVs and kitchen appliances — products that Best Buy also sells.
The retailers’ results helped lead to a major sell-off on Wall Street last week, which dragged Best Buy’s stock to a 52-week low on Friday.
The tempered expectations likely set the stage for Wall Street’s positive reaction to Best Buy’s results on Tuesday morning, even as the retailer cut its forecast and warned of tougher times ahead.
Like other retailers, Best Buy is “seeing some increasing signals of concern,” Barry said on a call with reporters. Consumers are putting more money toward experiences like booking vacations. Their dollars aren’t going as far as fuel, food and other basics cost more. Climbing mortgage rates and rising debt levels are adding pressure, too.
People are “pulling back at a faster, deeper pace than we had initially assumed,” she said.
Best Buy has seen its mix of customers change, too, she said. Earlier on in the pandemic, the company drew more low-income and female customers. Its stores and website are now attracting a larger number of higher-income and male shoppers again.
More promotions, fewer employees
Best Buy has shaken up the makeup of its workforce, the look of its stores and the mix of merchandise during the pandemic.
It now has fewer employees than when the global health crisis began — a level that Barry said is appropriate as more sales move online. The company also plans to do about 45 remodels this year across its more than 1,000 stores and will open outlet stores in Chicago, Houston and Phoenix. And its expanded product assortment now includes high-tech beauty gadgets, patio furniture and exercise equipment.
The company is also looking to grow its services business and strengthen ties with customers. Last year, it launched Totaltech, a membership program that costs $199.99 and includes tech support services and an extended window for returns and exchanges. Barry declined to say how many members Totaltech has so far, but said the program will “drive frequency and share of wallet overtime.”
Best Buy also has a team that provides products and services for businesses such as homebuilders and hospitality companies. Barry said revenue from that unit rose 15% in the quarter compared with a year ago and is up more than 70% on a two-year basis.
On the call with reporters, Barry said Best Buy has always had a range of price points to appeal to value-conscious customers but that promotions have returned for deal seekers. Earlier in the pandemic, retailers including Best Buy ran fewer promotions as spending spiked and supply chain snarls led to tighter supplies.
Barry also noted that technology plays a different role in people’s lives compared with the recession in 2008. American homes on average now have 12 connected devices, she noted.
“That to me infers this is equipment that you need to operate your life,” Barry said.
Best Buy’s shares rose less than 1% to close at $72.59 on Monday. The company’s stock is down about 29% so far this year and is underperforming the S&P 500’s year-to-date decline of about 17%.
Read the company’s earnings release here.
Correction: Excluding items, Best Buy earned an adjusted $1.57 per share, and its net sales fell to $10.65 billion. An earlier version misstated the figures.
Walmart strikes exclusive streaming deal to give Paramount+ to Walmart+ subscribers
In this photo illustration, a woman’s silhouette holds a smartphone with the Walmart logo displayed on the screen and in the background.
Rafael Henrique | Lightrocket | Getty Images
Starting in September, customers who belong to the retailer’s program will get free access to an ad-supported plan on Paramount+, which includes movies and shows such as “Star Trek,” “Paw Patrol,” “The Godfather” and “SpongeBob Squarepants.”
Walmart launched Walmart+ nearly two years ago to drive sales and deeper customer engagement. The program costs $98 per year, or $12.95 per month, and is the company’s answer to Amazon Prime, but with a different set of perks. It includes free shipping of online purchases, free grocery deliveries for orders of at least $35 and discounts on prescriptions and gas.
Now it will also include access to the “essential tier” of Paramount+, which typically costs $4.99 per month and includes commercials. Paramount also sells a premium product without ads for $9.99 per month.
“With the addition of Paramount+, we are demonstrating our unique ability to help members save even more and live better by delivering entertainment for less, too,” Chris Cracchiolo, general manager of Walmart+, said in a news release.
Walmart said in a news release on Monday that it has had positive membership growth every month since its launch in September 2020. But since launching the service, the retail giant has declined to share its subscriber total.
According to estimates by market research firm Consumer Intelligence Research Partners, Walmart+ had 11 million customers as of July — the same as in the April. A survey by equity research firm Morgan Stanley pegged the subscriber count higher at about 16 million members as of May.
Paramount+ is one of the many services that compete for eyeballs in the streaming industry. Paramount Global announced earlier this month that Paramount+ has 43.3 million subscribers around the world. The company aims to reach 100 million subscribers by 2024.
The deal with Walmart will give Paramount+ a new distribution channel to add subscribers as well as a branding boost. Paramount+ is the only streaming service that has struck a deal with Walmart and wanted to launch exclusively to get full marketing attention, according to a person familiar with the deal who was not authorized to speak publicly about it.
Jeff Shultz, chief strategy officer and chief business development officer of Paramount Streaming, said the two companies have worked closely together for years by selling consumer products in Walmart’s stores.
The Wall Street Journal first reported the news of the deal.
Walmart will report its second-quarter earnings on Tuesday.
WATCH: Walmart+ members to get access to Paramount+
People are spending lots of money on makeup and beauty, and retailers are cashing in
Target has added new brands to its beauty department. At a growing number of stores, it also has mini Ulta Beauty shops with prestige brands.
Melissa Repko | CNBC
As prices creep up, some people have decided against getting a new outfit, delayed big purchases like TVs or cancelled Netflix accounts.
But for now, they’re still splurging on beauty.
For retailers, the beauty category has become a rare bright spot as people pull back on spending amid surging inflation. Often seen as an affordable luxury, it is the only discretionary retail category with rising unit sales in the first half of the year, according to The NPD Group, which tracks categories including clothing, tech and toys, as well as beauty products at specialty and department stores.
“You may not be able to go out to eat out as much, but you can buy yourself a lipstick,” said Olivia Tong, an analyst for Raymond James.
This spring, Target called out the strength of its beauty sales, even as it twice cut its profit outlook for the year. Walmart is also investing in the category and rolling out new beauty displays to hundreds of stores, despite its warnings that shoppers are skipping over discretionary categories like apparel.
Other factors work in the industry’s favor, too. Weddings and parties have picked up again. More people are heading back to the office, and can no longer hide behind their Zoom filters. And during the pandemic, some people got in the habit of pampering themselves at home with face masks, hair treatments and other beauty products.
Larissa Jensen, a beauty analyst for NPD, called it the return of the “lipstick index” — a term made famous by Leonard Lauder, chairman of the board of Estee Lauder, to explain climbing sales of cosmetics during the recession in the early 2000s.
As consumer sentiment has fallen, lipstick sales volume has climbed, Jensen said. That increase has carried over to other beauty products. Makeup sales, including lipstick, are up 20%, skincare is up 12%, fragrance is up 15% and hair care is up 28% for the first half of the year — and they are all growing in units, as well as dollars, she said.
Much of the beauty category’s growth is coming from households that earn over $100,000 a year, and Jensen said discounters may have a tougher time capitalizing on the trend. Still, beauty’s resilience could provide some cushion for big-box retailers in a slowdown − if they can figure out how to cash in.
Beauty at $3, $5, $9
Walmart and Target both cut their profit forecasts after having to mark down prices on apparel, home goods and other products that aren’t selling. Yet both companies are refreshing their beauty departments and adding new brands to attract customers.
A year ago, Target began opening hundreds of Ulta Beauty shops inside of its stores with brands including MAC Cosmetics and Clinique. The company plans to add more than 250 this year and eventually have the shops at 800 locations, representing about 40% of its U.S. footprint.
And after seeing fragrance become the biggest sales-driver in prestige beauty during the last holiday season, it also added popular fragrance brands to the Ulta shops, including Jimmy Choo Man, Juicy Couture and Kate Spade New York.
Since January, Target has introduced more than 40 brands to its stable of beauty products, including “clean” products that are free of certain ingredients and Black-owned and Black-founded brands.
On an earnings call in mid-May, CEO Brian Cornell said beauty saw double-digit growth in comparable sales in the fiscal first quarter versus the year-ago period. That broke from other categories, besides food and beverage and essentials, which saw a noticeable slowdown.
Walmart has added about a dozen prestige beauty brands to select stores. It struck a deal with British beauty retailer, Space NK, to add the assortment and develop a private label.
Melissa Repko | CNBC
At Walmart, new beauty displays were set up this summer at 250 of the company’s locations, featuring Mario Badescu, Patchology and other brands typically found at specialty beauty shops or department store makeup counters.
A more affordable display called “Beauty Finds” also began rolling to nearly 1,400 stores, offering shoppers lip glosses, lotions and more for $3, $5 or $9.
Walmart has also struck exclusive deals with direct-to-consumer companies like Bubble, a skincare brand with colorful packaging and focus on Gen Z and young millennial customers. For the past few quarters, it has seen double-digit growth in its cosmetics business, said Creighton Kiper, Walmart’s vice president of merchandising for beauty.
“Beauty is this fascinating category where it’s not like food and it’s not like health and wellness, but yet the customer interacts and engages with it every day,” he said in an interview earlier this summer. “You’ve got this mental wellness component to it around confidence and feeling good about yourself.”
When budgets get tighter, Kiper said customers might also fall back on skills they gained during the pandemic — such as doing their nails or hair color at home — and go to Walmart to shop for an at-home twist on the salon.
Ashley Marie Lemons, a stay-at-home mom in suburban Atlanta, said her family is eating out less often because they’re spending more on groceries, diapers and other necessities. She said she cooks more meatless meals and buys hot dogs instead of pricier meats, such as ribs.
But she said she still allows herself to spend about $50 a month on beauty products like eyeshadow pallets and mascaras.
“It’s an outlet for me,” she said. “Some people like art. It’s a creative way for me to express myself.”
Salman Rushdie reportedly on a ventilator and unable to speak after he was stabbed
Author Salman Rushdie is reportedly on a ventilator and unable to speak after being attacked while on stage in western New York on Friday.
State troopers confirmed in a press conference Friday afternoon that Rushdie was stabbed at least once in the neck and at least once in the abdomen while on stage for a panel in Chautauqua in western New York.
Staff and audience members rushed to the stage and pinned the assailant to the ground following the attack, state troopers said. A state trooper who was present took the suspect into custody with the assistance of a local sheriff’s deputy.
Rushdie was treated by a doctor who was in the audience before emergency medical services arrived and airlifted him to a local trauma center.
After hours of surgery, Rushdie was reportedly on a ventilator and unable to speak on Friday evening.
“The news is not good,” Andrew Wylie, his book agent, wrote in an email reported by Reuters. “Salman will likely lose one eye; the nerves in his arm were severed; and his liver was stabbed and damaged.”
Author Salman Rushdie is tended to after he was attacked during a lecture, Friday, Aug. 12, 2022, at the Chautauqua Institution in Chautauqua, NY.
Joshua Goodman | AP
The state police department identified the suspect as Hadi Matar, age 24, from Fairview, NJ. The New York State Police is collaborating with the FBI and local police for the investigation.
A preliminary review of Matar’s social media accounts by law enforcement showed him to be sympathetic to Shia extremism and the causes of the Islamic Revolutionary Guard Corps, a law enforcement person with direct knowledge of the investigation told NBC News. Law enforcement officers reportedly found images of Solemani and an Iraqi extremist sympathetic to the Iranian regime in a cell phone messaging app belonging to Matar, according to NBC News.
There are no definitive links to the IRGC but the initial assessment indicates he is sympathetic to the Iranian government group, the official said.
The New York State Police released a statement immediately following the incident:
“On August 12, 2022, at about 11 a.m., a male suspect ran up onto the stage and attacked Rushdie and an interviewer,” the statement read. “Rushdie suffered an apparent stab wound to the neck, and was transported by helicopter to an area hospital. His condition is not yet known. The interviewer suffered a minor head injury. A State Trooper assigned to the event immediately took the suspect into custody.”
A spokesperson from the Chautauqua Institution, where the panel was being held, told CNBC that the organization was coordinating with emergency officials on a public response after the attack.
The Wylie Agency, which represents Rushdie, did not immediately respond to a request for comment.
Rushdie’s book “The Satanic Verses” forced him into hiding after it was banned in Iran and a $3 million bounty was put on his head. The Iranian government has distanced itself from the bounty, according to The Associated Press, but the fatwa has been continued by a semiofficial religious organization, which raised the bounty to $3.3 million.
Rushdie has been awarded many of the top literary prizes, including two Whitbread Prizes for best novel. He was knighted in 2007 while Tony Blair was prime minister. Blair released a statement on the attack.
Author Salman Rushdie at the Blue Sofa at the 2017 Frankfurt Book Fair on October 12, 2017 in Frankfurt am Main, Germany.
Hannelore Foerster | Getty Images
“My thoughts are with Salman and all his family,” Blair wrote on Friday. “A horrible and utterly unjustified attack on someone exercising their right to speak, to write and to be true to their convictions in their life and in their art.”
Rushdie was scheduled to sit on a panel alongside Henry Reese, president of City of Asylum in Pittsburgh, an organization that provides sanctuary to writers exiled under threat of persecution.
“We ask for your prayers for Salman Rushdie and Henry Reese, and patience as we fully focus on coordinating with police officials following a tragic incident at the Amphitheater today,” the Chautauqua Institution said in a tweet Friday. “All programs are canceled for the remainder of the day. Please consult the NYS Police statement.”
The institution’s website described the panel as “A discussion of the United States as asylum for writers and other artists in exile and as a home for freedom of creative expression.”
Rushdie was the former president of PEN America, a nonprofit that defends freedom of expression and supports persecuted writers. PEN America CEO Suzanne Nossel released a statement in the wake of the attack.
“Just hours before the attack, on Friday morning, Salman had emailed me to help with placements for Ukrainian writers in need of safe refuge from the grave perils they face,” Nossel wrote. “Salman Rushdie has been targeted for his words for decades but has never flinched nor faltered. He has devoted tireless energy to assisting others who are vulnerable and menaced.”
New York Gov. Kathy Hochul thanked the New York State Police for their response to the attack on Rushdie.
“Our thoughts are with Salman & his loved ones following this horrific event,” wrote the governor. “I have directed State Police to further assist however needed in the investigation.”
Hochul later said Rushdie is alive.
“It was a state police officer that stood up and saved his life,” the governor said during an event about gun violence, adding that the event moderator was also attacked. “We’re monitoring the situation, but he’s getting the care he needs at the local hospital.”
This is the latest in a series of onstage attacks against public figures, including Rep. Lee Zeldin, R-N.Y., in a town near Rochester, New York, earlier this summer, Dave Chappelle at the Hollywood Bowl, and Chris Rock during the Oscars.
NBC News contributed to this report
Correction: Rep. Lee Zeldin, R-N.Y., was attacked in a town near Rochester, New York, earlier this summer. An earlier version misspelled his name and misstated the location.
Business News3 months ago
NFTMagazine.com Is Bringing NFTMag Conference 2022 to Miami this Year Says JetSetFly
Interviews7 months ago
Interview with Jean-Francois Desormeaux, Real Estate Investor
Interviews4 months ago
Paying it Forward — Meet Dr. Jonathan Kenigson, the Founder of the World’s Leading Think-Tank in the Quadrivium
Community2 months ago
The Bassnectar Community – It Belongs to All of Us
Interviews7 months ago
Interview with Trey Branham, Partner at Dean Omar Branham Shirley
Interviews7 months ago
Minette Norman Featured in Exclusive Entrepreneurial Interview
Community6 months ago
A Multi-Millionaire in The Making: An Interview with Ty Panopoulos, NFT Mentor and Social Media Marketing Expert
Interviews7 months ago
Interview with Danavir Sarria, Founder of SupplyDrop