What Display Daily thinks: It appears that the company experienced growth in the domestic tablet and computing categories, a 6% increase in comparable sales. However, this growth was more than offset by declines in other categories such as appliances, home theater, and gaming.
This doesn’t augur well for TV sales, and tablet sales are primarily driven by Apple, at least in Best Buy’s case that seems to be the only driver of consumer interest in the category. It’s well worth considering the retailer as having a lead on consumer sentiment for the kind of products that display makers want to see being sold.
Hope isn’t a great business strategy but it seems to be fueling expectations for the second half of 2024. Maybe there is hope; there is a likely interest rate drop on the cards in the US which may spur consumer spending. But that’s not a give.
According to Omdia’s David Hsieh, Chinese TFT LCD makers are planning a two week production stop in October which is probably a better indication of what we should expect. Inventory levels are not being depleted, and TV sales don’t seem to be at a level that gives anyone confidence for second half growth. There is a real likelihood that a strong first half of 2024 year showing for the global TV market will turn into a a so-so, flat, or slightly down 2024 when all is said and done.
It’s unlikely that the US, in an election year, is going to be anything but a cautious market. All the signs point to more belt-tightening at display makers. Apple’s tablet business in the US is baked into the non-results because no real worthy competitor has risen up and consumers haven’t clamored for alternatives. That’s one of the strangest things about the US market given how much competition Apple stirs in other device categories.
Best Buy Stabilizes Itself
Best Buy’s recent financial results reflect a positive shift after several disappointing quarters, showing signs of stabilization and potential recovery. The company reported revenue of $9.29 billion, surpassing analysts’ expectations of $9.24 billion. This improvement in performance has been attributed to Best Buy’s strategic focus on enhancing customer experience, sharpening its market positioning, and expanding its non-GAAP operating income rate despite challenging market conditions.
CEO Corie Barry has said that customers are increasingly seeking value through sales events but are also willing to invest in high-price-point products when necessary or when new, compelling technology is available. This suggests that there is still demand for premium products, especially those that offer innovative features. However, it is Best Buy’s services business that is showing the best growth, with an 8.5% increase in sales. The company has been investing in this segment, unveiling new features like live-tracking for deliveries and installations.
Looking ahead, Best Buy has adjusted its fiscal year 2025 guidance, now expecting same-store sales to decline by 1.5% to 3%, which is slightly better than the previous forecast of a 3.5% decline to flat. Analysts are predicting ongoing pressure in the short term due to challenging macroeconomic trends and reduced consumer demand post-pandemic. However, there is optimism for a return to growth in the latter half of 2024 as the replacement cycle for products purchased during the pandemic begins, and new products, particularly in AI-driven devices, start to gain traction. The back-to-school season also presents a potential boost for Best Buy, with a Morgan Stanley survey indicating a 4% YoY increase in consumer spending on electronics, suggesting a favorable outlook for the retailer in the near term.
