NEW YORK — Best Buy Co. posted stronger-than-expected profits for the fiscal third quarter but continues to struggle with sales declines as shoppers pulled back on a broad range of items from appliances to computers and phones in an uncertain economy.
The nation’s largest consumer electronics chain also cut its annual sales outlook.
Best Buy joins a string of other major retailers reporting earnings results this week and last that have shown a further softening in consumer spending as shoppers come more under more pressure from dwindling savings, higher interest rates and still stubborn inflation.
Kohl’s posted on Tuesday a bigger-than-expected decline in quarterly sales, as customers spent less at its department stores. Lowe’s, the nation’s second-largest home improvement chain behind Home Depot, also reported drops in both sales and profits. It cut its annual sales outlook as it reported a big customer pullback in do-it-yourself projects.
The job market has remained resilient, but Americans are facing higher prices on many necessities like food and rent, even as the inflation rate is easing overall. And they’re also facing more expensive credit with the Federal Reserve hiking benchmark interest rates to combat inflation. It’s costing more to take out loans for appliances, cars and houses, or to use a credit card. As a result, consumers have become reluctant to spend unless there is a sale.
That scenario marks a big difference from Best Buy’s sales during the depths of the pandemic, which were fueled by oversized spending from shoppers who splurged on gadgets to help them work from home or help their children with virtual learning. Government stimulus checks fueled a lot of that spending as well.
Best Buy’s shares were down 3%, while Lowe’s shares were down nearly 2%. Kohl’s shares were down more than 13% in morning trading.
“In the more recent macro environment, consumer demand has been even more uneven and difficult to predict,” said Best Buy’s CEO…
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