Best Buy’s Q2 Profit Dips as Consumers Tighten Purse Strings
Target isn’t the only Minnesota-based retailer to record a substantial drop in profit this quarter. On Tuesday morning, Richfield-based electronics retailer Best Buy Co. Inc. reported net earnings of $306 million in its second quarter, down 58 percent compared to same period last year.
In a call with investors on Tuesday morning, Best Buy CEO Corie Barry noted that the company is operating in an “uneven sales environment” due to surging inflation. That’s left consumers with less money to spend on tech gadgets.
“Consumers are dealing with sustained and record-high levels of inflation in some of the most fundamental parts of their daily lives, like food,” Barry said.
Best Buy’s revenue also declined, but at a slower clip than its profit. The company reported total revenue of $10.3 billion in its second quarter, down from $11.8 billion year over year. Barry said that the company saw sales declines “across most product categories, with the largest impacts to comparable sales coming from computing and home theater.”
She suggested that customers are making more frugal choices when it comes to tech purchases.
“Our data would tell us that customers are making some decisions to trade down, particularly those in lower-income households,” Barry said.
Despite the declines, Best Buy actually surpassed Wall Street’s expectations in both revenue and earnings per share, according to CNBC.
And, just as Target execs suggested earlier this month, Barry indicated that market conditions may be slowly returning to normal after years of supply chain constraints and pandemic limitations. “We are starting to see some signs that the market is stabilizing and moderating,” she said.
This all comes against the backdrop of continued front-line layoffs at Best Buy. Barry acknowledged as much in her remarks, noting that an increasingly digital world forced the retailer to eliminate “some store roles.” Though she didn’t mention the precise number of jobs cut, Best Buy did report a $34 million restructuring charge in its second quarter, “primarily related to termination benefits.” Earlier this month, The Wall Street Journal reported that Best Buy has cut “hundreds of jobs in stores.”