Best Buy and Lowe’s reduced their expectations for sales in the year as consumers in the U.S. become increasingly more careful with their spending.
Best Buy, one of the biggest electronics and appliance retailers in the country, expects annual revenue of $43.1 billion to $43.7 billion, lower than the previous forecast of $43.8 billion to $44.5 billion.
The company said in its earnings statement that, given the sales trend seen in the third quarter, it was “prudent” to reduce the outlook.
“In the more recent macro environment, consumer demand has been even more uneven and difficult to predict,” Chief Executive Officer Corie Barry said in the statement. “We are excited for the important holiday season and are prepared for a customer who is very deal-focused with promotions and deals for all budgets, new shopping experiences, an expanded product assortment, and fast and free fulfillment.”
Best Buy revenue fell 8.8% in the fiscal third quarter to $9.76 billion, lower than the $9.9 billion estimated by analysts, according to CNBC, which cited LSEG data.
Reuters / Rick Wilking
Home improvement retailer Lowe’s didn’t make specific comments on the outlook for the holiday season. But the company said comparable sales fell in the third quarter as consumers are spending less on discretionary items, especially the most expensive ones.
The drop in sales of do-it-yourself items was bigger than the company expected.
Lowe’s estimates annual revenue of $86 billion, a reduction from the previous forecast of $87 billion to $87 billion.
“As we look ahead, Lowe’s is committed to offering value and convenience this holiday season, helping our customers save time and money,” Lowe’s CEO Marvin Ellison said in the earnings statement.
Lowe’s sales in the fiscal third quarter fell 13% from a year earlier to $20.5 billion. Analysts expected $20.9 billion, CNBC reported, citing LSEG data.
Recent economic and industry data have been pointing to a slowdown in consumer spending as U.S. interest rates remain at the highest level in 22 years. The Federal Reserve decided on Nov. 1 to keep its key rate unchanged in the range of 5.25% to 5.5%.
The Home Depot, a competitor of Lowe’s, said in its quarterly earnings report that it expects customers to be more careful with their spending in the coming months. The company also reduced its forecast for annual sales.
The Commerce Department said last week that retail sales fell in October for the first time since March. The 0.1% drop was still softer than economists expected. Furniture and home items were among the group that contracted the most, with a 2% drop.