(Reuters) -Best Buy on Wednesday forecast a bigger drop in annual sales than previously estimated, in another sign that consumers are feeling the pressure of decades-high inflation and curbing spending on discretionary items such as computers and TVs.
Shares in the electronics retailer dropped 3% in extended trading, after Best Buy also forecast a 13% slump in current-quarter comparable sales and paused its share buyback programs.
The warning comes close on the heels of a similar announcement from retail bellwether Walmart Inc, which on Monday slashed its profit forecast, saying soaring gas and food prices dented demand for discretionary items.
The shift in spending has pressured retailers, which rushed to secure inventories amid product shortages and supply chain issues last year but are now left with a surplus of unsold goods.
“As high inflation has continued and consumer sentiment has deteriorated, customer demand within the consumer electronics industry has softened even further,” Chief Executive Officer Corie Barry said.
The company had said in May that it was expecting comparable sales in the second quarter to be very similar to its first quarter, where it saw an 8% decline in the metric.
Best Buy had trimmed its expectations for 2023 when it reported quarterly results in late May, but had said it was not planning for a full recession at that time.
However, Chief Financial Officer Matt Bilunas on Wednesday noted it was difficult to assess the duration of the weakening sales environment and its impact on Best Buy’s business, owing to uncertainty in macro-economic conditions.
The company said it now expects full-year comparable sales to fall in the range of around 11%, compared to its previous forecast of a 3% to 6% decline.
(Reporting by Deborah Sophia in Bengaluru; Editing by Anil D’Silva)