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    in Business

    Clothing rental service Nuuly reaches profitability, beating rival Rent the Runway to the benchmark

    Urban Outfitters’ clothing rental service Nuuly has eked out its first profit, rivaling the performance of competitor Rent the Runway, which has yet to reach profitability nearly 15 years into its history.
    Nuuly posted an operating income of $300,000 off of $65.5 million in revenue in the three months ended Oct. 31.
    Urban’s wider business performed better than expected during the quarter.

    Nuuly warehouse
    Natalie Rice

    Urban Outfitters’ clothing rental service Nuuly has eked out its first profit thanks to a steady stream of new subscribers and a whopping 86% jump in revenue, hitting the benchmark before competitor Rent the Runway, which has yet to turn a profit nearly 15 years into its history. 
    The brand, which offers a $98 monthly subscription service for six items of clothing, saw $65.5 million in revenue and an operating profit of $300,000 during its fiscal third quarter ended Oct. 31. In the year-ago period, Nuuly posted $35.3 million in revenue and an operating loss of $3 million. 

    The milestone marks the first time Nuuly has earned money since its launch in 2019, a goal for the company from the beginning as it looked to prove it could run a clothing rental business profitably. While there is wide demand for clothing rental services, particularly among younger consumers, the logistics of rental have made it difficult to make money, threatening the platforms’ viability.
    “We set out with a plan to build a business that we thought could be quite big and we set out with a plan to build a business that had the potential to be profitable,” David Hayne, Nuuly’s president and Urban’s chief technology officer, told CNBC in an interview. “And that’s what we’ve been able to accomplish.” 

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    The brand’s meteoric rise as one of the go-to clothing rental services among Gen Z and Millennial consumers comes as competitor Rent the Runway struggles to turn a profit nearly 15 years into its history. 
    Nuuly’s active subscriber count, which reached 198,000 during the quarter, also eclipses Rent the Runway’s, which stood at 137,566 as of July 31. In April, CEO Jenn Hyman told CNBC the company needs to reach 185,000 subscribers to have enough free cash flow to cover all of its fixed costs, variable costs and the cost of its inventory. She said Rent is a “stone’s throw away” from profitability. The company is due to report third-quarter earnings on Dec. 5.
    Nuuly turned an operating profit in part because it is buoyed by the larger Urban business, which supplies many of the clothes that are available to renters and covers some of its costs. Given the size of Urban and its inventories, Nuuly can be efficient in ways that Rent cannot.

    In response, Rent told CNBC its definition of profitability differs from Nuuly’s and isn’t comparable. The company added that it has stronger unit economics than Nuuly and its sales routinely exceed the newcomer’s. Further, Rent said its gross margins are double Nuuly’s.

    Nuuly and Rent’s services are similar in that they both offer clothing for rent on a monthly basis for all sorts of occasions. Rent has long differentiated itself by focusing on designer brands and consumers seeking a higher-end products, while Nuuly started out by offering a more casual selection of clothing for everyday wear. These days, both companies offer a range of casual and formal options, although Rent still focuses more on designer brands.
    The clothing rental market is still a budding industry. As brands look to convince consumers to rent instead of buy, offering a wide-ranging assortment has proven critical. 
    “We wanted to give her, the subscriber, a chance to rent for something she could wear to the office, something she could just wear when she’s lounging around at home, or that dress that she wants to wear to a wedding,” said Hayne, the son of Urban’s founder and CEO Richard Hayne. “We wanted to build an assortment that was expansive enough and varied enough that she could have options for whatever her next month’s need was, whether or not she’s going to a wedding or has an event, whatever it may be.” 

    Urban beats on top and bottom lines

    Across the Urban business, the retailer performed better than expected on both the top and bottom lines. 
    It posted earnings per share of 88 cents, compared with expectations of 82 cents, according to LSEG, formerly known as Refinitiv. 
    Sales came in at $1.28 billion, compared with expectations of $1.26 billion, according to LSEG. 
    Same store sales rose 5.6% in the quarter, higher than the 4.9% uptick analyst had expected, according to StreetAccount. 
    Anthropologie, which sells hip, higher-end clothes and home goods, drove the quarter with $550 million in revenue. Comparable sales were up 13.2% during the quarter, well ahead of the 9.5% increase that analysts had expected, according to StreetAccount. 
    However, Urban’s namesake brand, known for its quirky assortment and sprawling mall stores, saw sales drop by about 12% to $324 million. Comparable sales also fell by 14.2%, which is worse than the 12% decline that analysts had expected, according to StreetAccount.
    Frank Conforti, the co-president and chief operating officer of Urban, said in a statement to CNBC that the company has “more work to do” at its namesake brand and is “laser focused on that opportunity.”
    In its release, Urban didn’t share any guidance on what it expects for its holiday quarter and the overall fiscal year. More

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    Fed gave no indication of possible rate cuts at last meeting, minutes show

    Federal Reserve officials at their most recent meeting expressed little appetite for cutting interest rates anytime soon, particularly as inflation remains well above their goal, according to minutes released Tuesday. 
    The summary of the meeting, held Oct. 31-Nov. 1, showed that Federal Open Market Committee members still worry that inflation could be stubborn or move higher, and that more may need to be done.

    At the least, they said policy will need to stay “restrictive” until data shows inflation on a convincing trek back to the central bank’s 2% goal.
    “In discussing the policy outlook, participants continued to judge that it was critical that the stance of monetary policy be kept sufficiently restrictive to return inflation to the Committee’s 2 percent objective over time,” the minutes said.
    Along with that, however, the minutes showed that members believe they can move “proceed carefully” and make decisions “on the totality of incoming information and its implications for the economic outlook as well as the balance of risks.”
    The release comes amid overwhelming sentiment on Wall Street that the Fed is done hiking.
    Traders in the fed funds futures market are indicating virtually no probability that policymakers will increase rates again this cycle, and in fact are pricing in cuts starting in May. Ultimately, the market expects that the Fed will enact the equivalent of four quarter percentage point cuts before the end of 2024.

    No mention of cuts

    However, the minutes gave no indication that members even discussed when they might start lowering rates, which was reflected in Chairman Jerome Powell’s post-meeting news conference.
    “The fact is, the Committee is not thinking about rate cuts right now at all,” Powell said then.
    The fed’s benchmark funds rate, which sets short-term borrowing costs, is currently targeted in a range between 5.25%-5.5%, the highest level in 22 years.
    The meeting occurred amid market worries over rising Treasury yields, a topic that appeared to generate substantial discussion during the meeting. The same day, Nov. 1, when the Fed released its post-meeting statement, the Treasury Department announced its borrowing needs over the next few months, which actually were a bit smaller than markets had anticipated.

    Stock chart icon

    10-year Treasury yield, 3 months

    Since the meeting, yields have receded off 16-year highs as markets digest the impact of heavy debt-fueled borrowing from the government and views over where the Fed is headed with rates.
    Officials concluded that the rise in yields had been fueled by rising “term premiums,” or the extra yield investors demanded to hold longer-term securities. The minutes noted that policymakers viewed the rising term premium as a product of greater supply as the government finances its huge budget deficits. Other issues included the Fed’s stance on monetary policy and views on inflation and growth.
    “However, they also noted that, whatever the source of the rise in longer-term yields, persistent changes in financial conditions could have implications for the path of monetary policy and that it would therefore be important to continue to monitor market developments closely,” the minutes said.

    Economic growth to slow

    In other business, officials said they expect economic growth in the fourth quarter to “slow markedly” from the 4.9% increase in Q3 gross domestic product. They said that risks to broader economic growth are probably skewed to the downside, while risks to inflation are to the upside.
    As for current policy, members said it “was restrictive and was putting downward pressure on economic activity and inflation,” the minutes said.
    Public remarks from Fed officials have been split between those who think the central bank can hold here while it weighs the impact that its previous 11 hikes, totaling 5.25 percentage points, have had on the economy, and those who believe more increases are warranted.
    Economic data also has been split, though generally favorable for inflation trends.
    The Fed’s key inflation indicator, the personal consumption expenditures price index, showed core inflation running at a 3.7% 12-month pace in September. The number has improved considerably, dropping a full percentage point since May, but is still well above the Fed’s target.
    Some economists think getting inflation down from here could be tricky, particularly with wage increases running strong and more stubborn components such as rent and medical care elevated. Indeed, so-called sticky prices rose 4.9% over the past year, according to an Atlanta Fed gauge.
    On employment, perhaps the most critical factor in getting inflation lower, the jobs market is strong though moderating. Nonfarm payrolls increased by 150,000 in October, one of the slowest months of the recovery, though the unemployment rate has climbed to 3.9%. The half percentage point increase of the jobless rate, if it persists, is commonly associated with recessions.
    Economic growth, after a robust first three quarters in 2023, is expected to slow considerably. The Atlanta Fed’s GDPNow tracker is pointing to growth of 2% in the fourth quarter.
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    Why house prices have risen once again

    In parts of San Francisco, the housing market is in dire straits. Consider the example of one swish apartment close to City Hall, with quartz countertops and a rooftop deck, which in 2019 sold for $1.25m. Not today. After the chaos of the covid-19 pandemic, City Hall now overlooks the locus of the city’s drug problems. Biblical scenes of lawlessness and human suffering play out every night. The flat is now listed for $769,000—and is yet to sell.Away from its troubled districts, though, San Francisco’s housing market is once again robust. Prices have risen by 3% from a trough reached earlier this year. Property in swankier parts of town fetches well above asking price. In nearby San Jose, in Silicon Valley, house prices are up by 8% from the trough. The story is similar across the rich world: pockets of weakness, but surprising overall strength.image: The EconomistFigures from the Dallas branch of the Federal Reserve suggest that global house prices rose by 1.3% between the first and second quarters of 2023. Estimates for more recent months point to a further rise (see chart). In cash terms this puts them in line with the previous peak reached in 2022. Adjusted for inflation, they have fallen by less than 5%. That pales in comparison with the 13% peak-to-trough decline which followed the financial crisis of 2007-09, and which also lasted a lot longer.Even in places where the housing market went bananas during the pandemic, leading people to expect a crash, prices are now higher than many had feared. In Britain, a house-price index produced by Halifax, a building society, rose by 1.1% in October, defying economists’ expectations for a 0.4% monthly drop (though the number of transactions is unusually low). Data from Zillow, a housing website, indicate that American house prices are nearly 2% higher than a year ago. A recent survey by Bloomberg, a financial-data firm, suggests that Australian house prices may rise by 7.7% this year.All this has taken most economists by surprise. Since the start of 2022 the rich world’s central banks have raised interest rates by an average of five percentage points. Economists thought house prices would crash as buyers’ purchasing power declined, mortgagors struggled to repay their debts and the economy slowed.Three factors, however, explain why housing markets have so far brushed off higher rates. The first is a shift in preferences. The pandemic seems to have made people more hermit-like: they work from home more and spend relatively more time on home entertainment than on going out. People thus place a higher value on their living space, raising demand for housing. This arrests price declines.The second factor is a changed mortgage market. In some countries, such as America and Denmark, it has long been common to borrow on fixed rates, allowing people to insulate themselves from central-bank rate rises. In the years before 2022 households in other countries shifted in the same direction. Between 2011 and 2021 the share of mortgages in EU countries on variable rates fell from nearly 40% to less than 15% (although some of the rest are fixed for only a few years). The effect has been to delay the impact of rate rises. Since 2021, the average mortgage rate across the rich world has only risen by half as much as the average central-bank policy rate.Household finances also make rising interest costs more manageable—the third factor supporting house prices. Following the property crisis that began in 2007, many governments introduced tougher regulations, shutting out less creditworthy borrowers. Richer folk find it easier to weather higher interest bills. In addition, many borrowers are still sitting on large “excess savings” accumulated during the pandemic, which they can use to make their repayments. The latest estimates suggest that, in the average rich country outside America, these savings still amount to 14% of yearly disposable income.Could housing-market pain merely be delayed? Mortgages with short-term fixes will soon expire. Households will then need to refinance, possibly at the high rates of today; if inflation remains sticky, central bankers may need to raise rates even further. Excess savings will run out eventually, and a rise in unemployment, linked to a weak economy, would also imperil some homeowners. But for now, the rich world is a long way from City Hall. ■ More

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    in Business

    Home sales fell to a 13-year low in October as prices rose

    Existing home sales in October were 14.6% lower than they were a year earlier.
    The median price of an existing home sold in October was $391,800, an increase of 3.4% from October 2022.

    Sales of previously owned homes were 4.1% lower in October compared with September, running at a seasonally adjusted annualized rate of 3.79 million units, according to the National Association of Realtors.
    It was the slowest sales pace since August 2010. Analysts were expecting a smaller drop, to 3.9 million units. Sales were down 14.6% year over year.

    The October sales count is based on closings from contracts likely signed in August and September. The average rate on the 30-year fixed mortgage had dropped to near 7% at the end of August, but then began rising sharply, jumping over 8% by mid-October. Rates have since retreated somewhat.
    “Prospective home buyers experienced another difficult month due to the persistent lack of housing inventory and the highest mortgage rates in a generation,” said Lawrence Yun, NAR’s chief economist. “Multiple offers, however, are still occurring, especially on starter and mid-priced homes, even as price concessions are happening in the upper end of the market.”
    At the end of October there were 1.15 million homes for sale, down 5.7% from a year earlier. This is about half as many homes as were available for sale pre-Covid. At the current sales pace, that represents a 3.6-month supply. a six-month supply is considered a balanced market between buyer and seller.
    Tight supply kept pressure under prices. The median price of an existing home sold in October was $391,800, an increase of 3.4% from a year ago ($378,800). Prices rose in all regions of the country. These annual price increases have been getting larger for four straight months. Roughly 28% of homes sold above list price.
    “While circumstances for buyers remain tight, home sellers have done well as prices continue to rise year-over-year, including a new all-time high for the month of October,” Yun said. “In fact, a typical homeowner has accumulated more than $100,000 in housing wealth over the past three years.”

    Sales fell in all price categories up to $750,000, but there was an increase in sales of higher-end homes. Homes priced above $1 million were up just over 9% from a year ago. Wealthier buyers either tend not to use mortgages or are less sensitive to monthly rate changes. Yun also noted that there are more homes available for sale on the higher end of the market.
    First-time buyers represented 28% of October sales, unchanged from a year ago and still significantly lower than the 40% share they have represented historically. Individual investors bought 15% of the homes, down from 18% in September and 16% from a year ago. All-cash deals made up 29% of sales, up from 26% in October 2022.
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    NFL committed to X partnership as Elon Musk’s social platform gets heat for hate speech

    NFL is sticking with X, formerly Twitter, NFL Chief Media and Business Officer Brian Rolapp told CNBC.
    Advertisers such as Disney and Apple have paused advertising on X over concerns about hate speech on the platform.
    Elon Musk, who bought the social media site last year, recently endorsed an antisemitic tweet.

    The National Football League is sticking with X, formerly known as Twitter, as Elon Musk’s site faces an advertiser revolt over hate speech and antisemitism on the platform.
    “I think X is in a very difficult business because of the content moderation that they have to deal with,” Brian Rolapp, the NFL’s media and business chief, told CNBC’s Julia Boorstin. “We continue to work with them because our fans are clearly there.”

    The league did not provide further comment on the matter.
    The NFL has partnered with the platform since 2013 as part of an effort to bring fans exclusive content.
    Since Musk took over last fall, the platform has been caught up in several controversies, including those surrounding X’s policy for moderating harmful content.
    In the latest wave of pushback, companies such as Apple and Disney have suspended advertising on the platform.
    Last week, Musk agreed with a post on the platform accusing “Jewish communities” of pushing “hatred against whites,” CNBC reported earlier this month. Musk has denied that he’s antisemitic.

    Earlier this month, left-leaning media watchdog site MediaMatters.org posted instances of Apple, Bravo and Oracle ads appearing next to antisemitic content on Musk’s platform. X on Monday sued Media Matters over the report, coinciding with an investigation launched by Texas Attorney General Ken Paxton into the watchdog site for possible fraudulent activity.
    Meanwhile, more than two dozen House Democrats on Tuesday alleged that X was profiting off of violent Hamas-related content and called on CEO Linda Yaccarino to explain how the company’s plans to curtail the harmful content on the platform. Hamas, a Palestinian militant group, launched a terrorist attack on Israel on Oct. 7, killing more than 1,000 people and seizing more than 200 hostages.
    Disclosure: NBCUniversal is the parent company of Bravo and CNBC.
    –CNBC’s Julia Boorstin contributed to this article. More

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    Ford to scale back plans for $3.5 billion Michigan battery plant as EV demand disappoints, labor costs rise

    Ford is scaling back plans for a $3.5 billion battery plant in Michigan as consumers shift to electric vehicles more slowly than expected, labor costs rise and the company moves to cut costs.
    Ford announced the facility in February. It quickly became a political target due to a licensing deal with Chinese battery manufacturer Contemporary Amperex Technology Co., or CATL.
    The company said Tuesday it is cutting production capacity by roughly 43% to 20 gigawatt hours per year and reducing expected employment from 2,500 jobs to 1,700 jobs.

    Ford CEO Jim Farley announces at a press conference that Ford Motor Company will be partnering with the worlds largest battery company, a China-based company called Contemporary Amperex Technology, to create an electric-vehicle battery plant in Marshall, Michigan, on February 13, 2023 in Romulus, Michigan.
    Bill Pugliano | Getty Images News | Getty Images

    DETROIT – Ford Motor is scaling back plans for a $3.5 billion battery plant in Michigan as consumers shift to electric vehicles more slowly than expected, labor costs rise and the company moves to cut costs.
    Ford executives including CEO Jim Farley and Chair Bill Ford initially announced the facility in February. It quickly became a political target due to its connection to Chinese battery manufacturer Contemporary Amperex Technology Co., or CATL. The plant is a wholly owned Ford subsidiary, but the U.S. automaker is licensing technology from CATL to produce new lithium iron phosphate, or LFP, batteries for EVs.

    Ford said Tuesday it is cutting production capacity by roughly 43% to 20 gigawatt hours per year and reducing expected employment from 2,500 jobs to 1,700 jobs. The company declined to disclose how much less it would invest in the plant. Based on the reduced capacity, it would still be about a $2 billion investment.
    The decision adds to a recent retreat from EVs by automakers globally. Demand for the vehicles is lower than expected due to higher costs and challenges with supply chains and battery technologies, among other issues.
    Reductions at the Marshall, Michigan, plant are part of Ford’s plans announced last month to cut or delay about $12 billion in previously announced EV investments. The company will also postpone construction of another electric vehicle battery plant in Kentucky.

    Ford Motor Co., Chief Executive Bill Ford announces Ford Motor will partner with Chinese-based, Amperex Technology, to build an all-electric vehicle battery plant in Marshall, Michigan, during a press conference in Romulus, Michigan, February 13, 2023.
    Rebecca Cook | Reuters

    “We looked at all the factors. Those included demand and the expected growth for EVs, our business plans, our product cycle plans, the affordability and business to make sure we can make a sustainable business out of this plant,” Ford Chief Communications Officer Mark Truby said during a media briefing. “After assessing all that, we are now good to confirm that we’re moving forward with the plant, albeit in a slightly smaller size and scope than what we originally announced.”
    Truby said the plant is still expected to open in 2026, even though the company halted production of the facility for roughly two months during collective bargaining with the United Auto Workers. The talks ended last week as Ford-UAW employees ratified a deal that included significant wage increases and a path for battery workers at the plant to be included under the record agreement, if organized by the union.

    The UAW did not immediately respond for a request for comment.

    Read more CNBC auto news

    Increased labor costs factored into Ford’s decision to scale back the plans, according to Truby. Ford CFO John Lawler last month said the new deal would add $850 to $900 per vehicle assembled in labor costs.
    Lawler declined to estimate how much the deal, which runs through April 2028, will cost the company. Deutsche Bank estimated the increase to be $6.2 billion during the terms of the deal.
    “We’re still very bullish on EVs and our EV strategy, but clearly, while there is growth, both in the U.S. and worldwide, clearly, the growth isn’t at the rate that we and others had expected,” Truby said. “We’re trying to be smart about this and how we move forward.”
    The plant has received political pushback from federal and local officials, including protests by residents in the rural Michigan city. U.S. lawmakers also have sought to review the licensing deal between Ford and CATL amid heightened tensions between the U.S. and China.
    Truby reiterated Tuesday that the company still believes it’s better business for the company and U.S. to license the technology instead of importing batteries from overseas. The plant is expected to be the first in the U.S. to produce LFP batteries.
    The lithium iron phosphate, or LFP, batteries the plant will produce are instead of pricier lithium-ion or nickel cobalt manganese batteries, which Ford is currently using. The new batteries are expected to offer different benefits at a lower cost, and allow Ford to increase EV production and profit margins.
    Ford, which is currently sourcing LFP batteries from CATL, follows Tesla in using LFP batteries in a portion of its vehicles in part to reduce the amount of cobalt needed to make battery cells and high-voltage battery packs.
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    Dick’s Sporting Goods shares jump after retailer hikes outlook as it bounces back from theft woes

    Dick’s Sporting Goods raised its full-year outlook after slashing it in the prior quarter over theft concerns.
    The athletic goods retailer, known for its wide expanse of branded products and sports equipment, said it’s “excited” for the holiday shopping season.
    In the prior quarter, Dick’s shocked investors when it blamed a 23% drop in profits on theft and markdowns.

    A Dick’s Sporting Goods store stands in Staten Island on March 09, 2022 in New York City.
    Spencer Platt | Getty Images

    Shrink who? 
    Sales and profit at Dick’s Sporting Goods bounced back in the fiscal third quarter, leading the retailer to raise its full-year guidance Tuesday after it shocked investors earlier this year when it slashed its outlook over theft concerns.

    Dick’s beat Wall Street’s estimates on the top and bottom lines for the period. In a news release, the company said it’s “excited” for the holiday season after seeing “strong” back-to-school sales. 
    Dick’s shares jumped more than 8% in premarket trading after the news.
    Here’s how the athletic goods retailer performed during its fiscal third quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG, formerly known as Refinitiv:

    Earnings per share: $2.85, adjusted, vs. $2.44 expected
    Revenue: $3.04 billion vs. $2.94 billion expected

    The company’s reported net income for the three-month period that ended Oct. 28 was $201 million, or $2.39 per share, compared with $228 million, or $2.45 per share, a year earlier. Excluding one-time items, Dick’s saw earnings per share of $2.85. 
    Sales rose to $3.04 billion, up about 2.8% from $2.96 billion a year earlier.

    For the full year, the company now projects earnings per share to be between $11.45 and $12.05, compared with the $11.27 to $12.39 range that analysts had expected, according to LSEG. Dick’s raised its guidance from a prior range of $11.33 to $12.13. But it still falls below the original outlook the company set earlier this year, when it said it expected earnings of $12.90 to $13.80.
    Dick’s also raised its comparable sales outlook slightly and expects them to be up between 0.5% and 2%, compared with a previous range of flat to up 2%. Much of that range would top the 0.7% increase that analysts had expected, according to StreetAccount. 
    Dick’s didn’t immediately share further details on its holiday forecast. But since it only slightly raised its same-store sales outlook despite the strong third-quarter beats, Dick’s appears somewhat cautious entering the holiday season, mirroring sentiment from other retailers that are concerned demand will be tepid.
    When Dick’s reported fiscal second-quarter earnings over the summer, its stock plummeted 24% after it blamed theft and aggressive markdowns for a staggering 23% drop in profits. Upticks in “organized retail crime and theft in general” – plus aggressive markdowns to clear out excess inventory – contributed to the profit loss. The company said it would impact its guidance for the year. 
    While earnings guidance at Dick’s is still below the range it originally set for itself, strong sales during the back-to-school months led the company to raise its outlook and strike a positive tone for the crucial holiday shopping season. 
    “We are pleased with our third quarter results. With our best-in-class athlete experience and differentiated assortment, we had a very strong back-to-school season and continued to gain market share as consumers prioritize DICK’S Sporting Goods to meet their needs,” President and CEO Lauren Hobart said in a news release. “As a result of our strong Q3 performance, we are raising our full year outlook, which balances the confidence we have in our key strategies with an acknowledgment of the uncertain macroeconomic environment. We’re excited for the upcoming holiday season and the product, service and experience we are providing to our athletes.”
    Read the full earnings release here.
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    Best Buy cuts sales forecast, as holiday shoppers hunt for deals

    People walk past a Best Buy store in Manhattan, New York City, November 22, 2021.
    Andrew Kelly | Reuters

    Best Buy cut its full-year sales outlook Tuesday, as the company weathers a period of cooler demand and prepares for price-conscious holiday shoppers.
    The consumer electronics retailer beat Wall Street’s quarterly earnings expectations, but fell short on revenue.

    Best Buy said it now expects revenue to range from $43.1 billion to $43.7 billion for the fiscal year, down from its previous range of between $43.8 billion to $44.5 billion. The retailer said it expects comparable sales to decline by between 6% and 7.5%, lower than its previous guidance of a 4.5% to 6% drop.
    It also lowered the high end of its profit guidance, saying it expects adjusted earnings per share to range from $6 to $6.30 instead of between $6 and $6.40.
    CEO Corie Barry said in a news release that Best Buy anticipated softer sales of consumer electronics this year. But with an economic backdrop marked by high inflation and the Federal Reserve’s campaign to cool down spending, she said consumer demand “has been even more uneven and difficult to predict.”
    She said the retailer is ready for the holiday season and “prepared for a customer who is very deal-focused with promotions and deals for all budgets.”
    Here’s how the company did for the fiscal third quarter, compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

    Earnings per share: $1.29 adjusted vs. $1.18 expected
    Revenue: $9.76 billion vs. $9.90 billion expected

    Best Buy, like home improvement retailers, is seeing demand moderate as it follows years of increased purchases of computer monitors, home theaters, and appliances during the Covid pandemic. Barry previously told investors that she expected this fiscal year to be “the low point in tech demand” before purchases pick up again.
    In the three-month period that ended Oct. 28, Best Buy said net income dropped to $263 million, or $1.21 per share, from $277 million, or $1.22 per share, in the year-ago period. Revenue fell from $10.59 billion a year earlier.
    Comparable sales, an industry metric that includes sales online and at stores open at least 14 months, fell by 6.9% year over year and 7.3% in the U.S., as shoppers bought fewer appliances, computers, home theaters and mobile phones. The company said it did see sales growth in gaming.
    The company’s online sales declined by 9.3% in the U.S.
    Even as it saw lower demand for merchandise, Best Buy drove higher profitability as it made money from its annual membership program, sold products with more favorable margins and had lower supply-chain costs.
    Shares of Best Buy closed at $68.11 on Monday. So far this year, the company’s stock has tumbled about 15%, underperforming the 18% gains of the S&P 500 during the same period.
    This is breaking news. Please check back for updates. More