Best Buy (BBY) may be turning the corner as consumers upgrade their COVID purchases.
The electronics retailer is set to report its fiscal 2025 first quarter results on Thursday morning. Net sales are expected to come in at $8.97 billion, 6.26% lower compared to a year ago. Adjusted earnings per share are expected to decrease 6.26% year-over-year to $1.08.
CEO Corie Barry said on a call following its Q4 earnings the company expects sales trends to stabilize this year, as customers look to refresh the gadgets they brought during the pandemic.
Total US sales are expected to drop 5.02% — marking ten straight quarters of decline — albeit less than the 10.4% seen in Q1 of last year. Appliance sales are expected to lead the decline in the US, followed by consumer electronics, computing and mobile phones, and entertainment.
International sales are expected to drop 3%.
Shares of the company has been down more than 8% year-to-date, compared to the 15% gain of the S&P 500 (^GSPC).
Prior to the report, there were 9 buys, 15 holds and 4 sells on shares of Best Buy.
Factors like concern around discretionary spending, and uncertainty around when the replacement cycle will begin, are clouding the outlook for Best Buy.
Bank of America analyst Robert Ohmes, who maintains an underperform rating on the stock, wrote in a client note that he expects “continued weakness in the appliance category given year-over-year declines in pricing and higher retail promotions as well as potential market share pressures from competitor Costco.” The wholesale retailer is set to report its earnings Thursday afternoon.
But there is optimism that the replacement cycle could kick in earlier. Product innovation around AI could be a a key driver, with products like Samsung’s AI-enabled phone and Microsoft Copilot laptops.
Joe Feldman of Telsey Advisory Group wrote in a client note that laptops “has already seen a positive comp (comparable sales) due to the replacement cycle”, adding that he expects more momentum as “new technology hits the market” for back-to-school season.
A similar notion from Jonathan Matuszewski at Jefferies, who said the “replacement cycle [is] picking up steam,” with consumers looking at “consumer electronics, gaming consoles, home theater systems, and other related products.”
Wall Street is also keeping an eye on labor costs, as reports of Geek Squad layoffs came out in the quarter.
The earnings breakdown
Here’s what Wall Street expects from Best Buy, compared to last year’s first quarter results:
Adjusted EPS: $1.08, compared to $1.15
Net Sales: $8.97 billion, compared to $9.47 billion
Total US sales: -5.02%, compared to -10.4%
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Appliances: -9.92%, compared to -15.5%
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Entertainment: -2%, compared to +3.8%
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Consumer electronics: -6%, compared to -9.8%
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Computing and mobile phones: -4.17%, compared to -13.3%
International: -3%, compared to -5.5%
As of its 2024 fourth quarter results, the company expected fiscal 2025 same store sales to be flat year-over-year on the high end of its guidance range.
The company expects sales to be “down in the first half and up in the second half of the year,” CEO Corie Barry said on the call with investors back in February. The low end of its same store sales range is a decline of 3%, assuming there is “lower customer demand” overall.
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.