Best Buy forecasts upbeat quarterly sales on steady gadgets demand; shares up

By Savyata Mishra

May 28 (Reuters) – Best Buy on Thursday forecast second-quarter sales above Wall Street estimates after beating quarterly expectations on steady smartphone and gaming console demand as well as growth in its ads and marketplace channels.

Shares of the U.S. electronics retailer rose 8% in early trading. They are down about 10% over the past 12 months.

CEO Corie Barry is set to step down at the end of October and will be succeeded by Jason Bonfig, a company veteran who is expected to focus on expanding its higher-margin advertising and marketplace businesses.

Best Buy has doubled down on offerings such as Geek Squad support and paid memberships, with Switch 2, PS5 and Xbox, AI glasses and health wearables supporting demand.

May sales rose at a high-single-digit pace but are expected to slow to about 1% in the current quarter following last year’s strong Nintendo Switch 2 launch. The outlook is still stronger than analysts’ expectation of a 0.4% decline.

Shoppers remain selective on big-ticket purchases amid concerns over rising fuel costs but are still willing to spend on higher-priced products prompted by replacement needs or new technology.

The retailer has pulled forward imports of computers and other electronics to offset rising memory chip costs as a global shortage tied to AI-led demand drives up component prices.

“At this point, we do not see indications of material inventory supply constraints for the rest of FY27,” CFO Matt Bilunas said.

The company expects only limited demand impact from the resulting product price hikes in the current quarter as customers adjust purchases across price tiers to stay within budget.

SHIFT TO HIGHER-MARGIN BUSINESSES

Incoming CEO Bonfig outlined plans to sharpen focus on the company’s retail, media and technology platform, expand its reach through marketplace offerings and enhance the customer experience.

“Looking forward, the 2026-27 window could be a sweet spot for AI-enabled hardware upgrades as the first generation of AI PCs becomes more affordable,” Michael Ashley Schulman, partner at Cerity Partners, said.

The retailer maintained its fiscal 2027 forecast of comparable sales in the range of a 1% decline to a 1% rise, with adjusted profit per share between $6.30 and $6.60.

Comparable sales rose 2% in the quarter ended May 3, rebounding from a 0.7% drop a year earlier and above analysts’ expectation of about 1%, according to data compiled by LSEG.

Best Buy reported profit of $1.28 per share, compared with $1.15 per share a year ago, and beat analysts’ estimate of $1.23 per share.

(Reporting by Savyata Mishra in Bengaluru; Editing by Pooja Desai)