Best Buy cuts profit forecast for inflation

Best Buy Co Inc, an American multinational consumer electronics retailer, cut its full-year profit forecast on Tuesday, joining other major US retailers to warn of an inflation hit, even as the electronics seller reported better than feared sales in the early part of the year, reports Reuters.
A spike in prices for everything from toothpaste to gas is taking a toll on consumer spending, while driving companies such as Walmart Inc and Target Corp to report their worst earnings miss in at least five years.
"Macro conditions worsened since we provided our guidance in early March which resulted in our sales being slightly lower than our expectations. Those trends have continued into Q2 and, as a result, we are revising our sales and profitability expectations for the year," Best Buy CEO Corie Barry said.
Best Buy's comparable sales fell 8 per cent in the first quarter ended April 30, but beat analysts' expectations of a 9.1 per cent drop, according to IBES data from Refinitiv, as its focus on faster delivery started paying off.
On an adjusted basis, the company earned $1.57 per share, missing analysts' estimates of $1.61 per share.
"Electronics are highly discretionary, big-ticket items. This puts them directly in the firing line of households looking to trim expenditure," said Neil Saunders, managing director of GlobalData.
However, Best Buy shares rose 2 per cent in premarket trading, but were still well off from last week's highs.
The company said it was expecting full-year comparable sales to fall 3 per cent to 6 per cent, compared with its previous forecast of a 1 per cent to 4 per cent drop.
It expects fiscal 2023 adjusted earnings per share of $8.40 to $9, compared with its previous forecast of $8.85 to $9.15.