NEW YORK (AP) — Best Buy, the nation’s largest consumer electronics chain, cut its annual sales and profit forecast Wednesday, citing surging inflation that has dampened consumer spending on gadgets.
The Minneapolis-based company echoed Walmart, which earlier this week said higher prices on basic necessities are forcing shoppers to cut back on discretionary items.
Shares of Best Buy fell more than 2% in after-market trading Wednesday.
Best Buy said it now expects this year’s sales at stores opened at least a year to be down 11%, much steeper than the 3% to 6% drop it originally forecast in May.
For the company’s fiscal second quarter, it expects comparable sales to be down 13%. Still, revenue for the quarter should be roughly 7.5% higher than the second quarter of 2020, it said.
In a statement, Best Buy’s CEO Corie Barry said the company entered the year expecting its financial results would be weaker than last year, when consumer spending was fueled by government stimulus support. But high inflation has eroded consumer sentiment, weakening demand for consumer electronics even further.
Matt Bilunas, chief financial officer at Best Buy, noted that given the economic uncertainty, it’s difficult to assess the duration of the weaker sales environment and the impact of its business.
Best Buy’s announcement comes as the Federal Reserve on Wednesday raised its benchmark interest rate by three-quarters of a point for a second straight time in its most aggressive drive in three decades to temper inflation.
The Fed’s move will raise its key rate, which affects many consumer and business loans, to a range of 2.25% to 2.5%, its highest level since 2018.
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AP Economics Writer Chris Rugaber in Washington contributed to this report.