Best Buy Co., Inc. (BBY) reported disappointing fiscal third-quarter 2025 results on Tuesday, sending its stock price tumbling. The electronics retailer missed both earnings and revenue expectations, raising concerns about the broader consumer electronics market.
The company reported adjusted earnings per share (EPS) of $1.26, falling short of the consensus estimate of $1.29. Revenue declined to $9.45 billion, a decrease from $9.76 billion in the same period last year and below the anticipated $9.63 billion. This represents a significant drop in sales, highlighting challenges faced by the company in the current economic climate.
A closer look at the numbers reveals that enterprise comparable sales experienced a concerning 2.9% decline. Domestic revenue, representing the bulk of Best Buy’s business, saw a 3.3% decrease to $8.70 billion, primarily due to a 2.8% comparable sales dip. This decline was heavily influenced by weaker-than-expected performance in key product categories such as appliances, home theater, and gaming. While the computing, tablets, and services categories showed some growth, they weren’t enough to offset the significant losses in other areas.
Best Buy’s online sales also experienced a slight slowdown. Domestic online revenue reached $2.73 billion, a 1.0% decrease on a comparable basis. Although online revenue represented a larger portion of total domestic revenue (31.4% versus 30.6% last year), this growth was insufficient to compensate for the overall decline in sales.
CEO Corie Barry attributed the softer-than-expected results to a confluence of factors. She highlighted the ongoing macroeconomic uncertainty, customers delaying purchases in anticipation of sales events, and a noticeable distraction among consumers leading up to the recent election, particularly affecting non-essential purchases. However, Barry expressed optimism, noting that customer demand has begun to recover in the early weeks of the fourth quarter as holiday shopping season kicks off and the election is behind us.
International revenue also underperformed, declining by 1.6% to $748 million. This decrease was attributed to a 3.7% comparable sales drop and the negative impact of foreign exchange rates, partially offset by new Best Buy Express locations in Canada.
Given the weaker-than-expected performance, Best Buy revised its fiscal year 2025 outlook. The company now projects revenue between $41.1 billion and $41.5 billion, down from its previous forecast of $41.3 billion to $41.9 billion and below the consensus estimate of $41.59 billion. Adjusted EPS is expected to fall within the range of $6.10 to $6.25, compared to the previous guidance of $6.10 to $6.35 and the consensus of $6.25. Comparable sales are now projected to decline between 3.5% and 2.5%, a more pessimistic forecast than the previous guidance of a 3.0% to 1.5% decline. The company anticipates that fourth-quarter comparable sales will remain flat or decline by up to 3%, with an adjusted operating income rate of 4.6% to 4.8%.
Reflecting the disappointing results, BBY stock experienced a significant drop, falling 7.23% to $86.30 in premarket trading on Tuesday. The company’s revised outlook and explanations for the shortfall highlight the challenging retail environment and the impact of external factors on consumer spending.
