- Comparable sales rise 2% and profit of $1.28 per share top estimates
- Current CEO Barry set to step down at the end of October, Bonfig to take over
- Retailer maintains fiscal 2027 sales, profit forecasts
- Shares jump 10% premarket
May 28 (Reuters) - Best Buy on Thursday forecast second-quarter sales above Wall Street estimates and beat first-quarter earnings 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 nearly 10% before the bell. 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 been doubling down on offerings such as Geek Squad support and paid memberships, with Switch 2, PS5 and Xbox, AI glasses and health wearables supporting demand.
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.
Shoppers remain selective about big-ticket purchases amid anxiety over rising fuel costs but are still willing to spend on higher-priced products prompted by replacement needs or new technology.
Sales growth in May rose at a high-single-digit pace but is expected to slow to about 1% in the current quarter following last year's strong Nintendo Switch 2 launch, CFO Matt Bilunas said. The outlook is still stronger than analysts' expectation of a 0.4% decline.
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.
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.
It has been ramping up imports of computers and other electronics to offset rising memory costs as a global shortage tied to AI-led demand drives up component prices.
"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.
Best Buy reported first-quarter earnings of $1.28 per share, beating analysts' estimate of $1.23 per share.
Reporting by Savyata Mishra in Bengaluru; Editing by Pooja Desai
Source: Reuters