(Reuters) -Best Buy Co Inc on Tuesday forecast a smaller drop in annual sales than it had previously estimated as steep discounts help soften the blow to electronics demand from inflation-hit customers ahead of the holiday season.
The retailer’s shares rose 7.2% to $75.91 in premarket trading, after it also said it had resumed its share buyback program and would spend about $1 billion for repurchases this year.
Surging prices have driven down demand for non-essential products this year, forcing Best Buy and other retailers to opt for discounts and promotions to clear excess stock of products such as televisions, laptops and other electronics.
Best Buy said it expects full-year comparable sales to fall about 10%, compared with a previous forecast of a decrease of about 11%.
The company expects Americans to leave their end-of-year holiday gift shopping as late as possible as they seek the best deals, and the retailer said it was timing discounts accordingly to better manage inventory levels.
“We have strategically and effectively managed our inventory flow based on a shopping pattern that we believe looks more similar to historical holiday periods,” Best Buy Chief Executive Officer Corie Barry said.
Shopping activity would be concentrated on Black Friday week, Cyber Monday and the two weeks leading up to Dec. 25, a departure from prior years when holiday shopping had been spread across three months, according to Barry.
The company’s comparable sales decreased 10.4% in the third quarter ended Oct. 29, compared with analysts’ estimates of a 12.9% fall, according to IBES data from Refinitiv.
On an adjusted basis, Best Buy earned $1.38 per share, beating analysts’ estimates of $1.03 per share, according to IBES data from Refinitiv.
(Reporting by Uday Sampath in Bengaluru; Editing by Shounak Dasgupta)
