Consumer electronics demand remains soft, prompting Best Buy to lower its full-year sales forecast.

• Best Buy on Tuesday cut its full-year sales forecast.
• The retailer missed Wall Street's quarterly revenue expectations.
• The company anticipates a decline in full-year comparable sales of between 2.5% and 3.5%, instead of the previously forecasted range of 1.5% to 3%.

On Tuesday, the company cut its full-year sales forecast because it missed Wall Street's quarterly revenue expectations and a new batch of iPhones and AI-enabled laptops failed to boost sales.

The consumer electronics retailer has revised its full-year revenue forecast to range from $41.1 billion to $41.5 billion, down from its previous guidance of $41.3 billion to $41.9 billion. Additionally, the company now expects full-year comparable sales to decline by between 2.5% and 3.5%, compared to its prior expectations of a 1.5% to 3% drop. Comparable sales include sales online and at stores open for at least 14 months.

Shares of Best Buy fell 7% in premarket trading Tuesday.

In the company's earnings release, CEO Corie Barry stated that the company experienced "weaker-than-anticipated demand." She attributed this to a "combination of macroeconomic uncertainty, customers delaying purchases until sales events, and preoccupation with the election, particularly in non-essential categories."

As holiday sales gain momentum and election concerns ease, consumer demand has picked up again in the first weeks of the current quarter.

"The consumer continues to seek value and sales events while also being willing to spend on high-price-point products when necessary or when new technology is introduced. As a result, we are taking a balanced approach to our optimism in the industry and our unique positioning, while also being pragmatic about the potential for uneven customer behavior in the future."

According to a survey of analysts by LSEG, the retailer's fiscal third quarter results differed from Wall Street's expectations.

• Earnings per share: $1.26 adjusted vs. $1.29 expected
• Revenue: $9.45 billion vs. $9.63 billion expected

Best Buy's net income increased to $273 million, or $1.26 per share, in the three months ending Nov. 2, from $263 million, or $1.21 per share, in the same period a year ago.

In the previous quarter, net sales were $9.76 billion, but they decreased to $9.45 billion in the current quarter.

Best Buy is anticipating a surge in customers looking to upgrade their devices after a two-year decline in sales of consumer electronics. A variety of factors have contributed to the retailer's slump, including increased demand for laptops, home theater systems, and kitchen appliances during the pandemic; a decrease in discretionary spending as Americans prioritize food and other necessities due to inflation; and a shift towards spending on services, such as travel and dining out.

In recent quarters, CEO Barry and CFO Matt Bilunas have predicted that this year will see "industry stabilization." Barry has also shared Best Buy's expectation that new gadgets, such as Apple's latest iPad line and Microsoft's AI-powered laptops, will boost sales.

Despite the launch of new devices, Best Buy's quarter saw a 2.9% decline in comparable sales across the business and a 2.8% decline in the U.S.

Best Buy attributed the decline in comparable sales to weak sales of appliances, home theaters, and gaming, but this was partially offset by growth in computing, tablets, and sales in the services category. The company provides services, such as installing technology in customers' homes.

In the U.S., the percentage of digital sales decreased by 1% annually.

Despite the S&P 500's 26% gains this year, Best Buy's shares have only increased by 19% as of Monday's close. Best Buy's market value was $19.98 billion on Monday, with shares closing at $93.03.

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