Macy’s, Best Buy Sales Declines Reflect Shopper Pullback on Discretionary Goods

Despite the decline, the company made progress in cutting levels of excess inventory without having to “chase unprofitable sales,” Chief Executive

Jeff Gennette

said. The company’s earnings came in better than expected in the quarter.

Best Buy Inc.

BBY -3.67%

said macroeconomic conditions have continued to weigh on the business and its customers. For the three months ended Jan. 28, Best Buy’s U.S. sales fell nearly 10%, dragged down by soft spending on everything from computers and phones to home theaters and appliances. The company noted some bright spots, reporting growth from videogaming products and tablets.

The results illustrate the challenges that sellers of discretionary goods might have in getting consumers to pay up for items that were purchased en masse earlier in the Covid-19 pandemic. Persistent inflation, shifts in the labor market and a downturn in corners of the stock market have all contributed to a malaise hitting shoppers across the country, retail analysts and executives have said. 

To cope with elevated levels of inflation, people have cut back on some purchases and, in some categories, opted for cheaper, private-label brands.

Walmart Inc.

said it has added more higher-income customers who have been seeking deals on goods.

Sales growth has been easier to come by for purveyors of groceries and food items. Walmart and

Target Corp.

said the food and beverage categories helped them post an increase in sales as more people spend time at and make more food at home. 

Supermarket operator

Kroger Co.

KR 5.16%

on Thursday said that same-store sales, excluding fuel, rose 6.2% in its recently completed quarter from a year ago as shoppers continued to spend on groceries. Results were boosted by a 10% increase in sales from its private-label products, which generally have lower prices than their name-brand competitors.

Inflation is also pushing some of those increases. Consumer prices for food at grocery stores and supermarkets were up 11.3% in January from the same month a year earlier, federal data show.

Kroger said it worked to reduce supply-chain costs in the latest quarter and manage high product-cost inflation by improving its sourcing. Kroger kept its profit margins roughly flat and delivered better earnings than analysts had been expecting.

Forecasts for the current year for a range of retailers have reflected challenges in projecting consumer spending. Furniture and home-decor retailer

Big Lots Inc.

on Thursday said it isn’t providing annual guidance for now, citing greater uncertainty in the macroeconomic environment.

Macy’s said that sales could fall as much as 3% this year, acknowledging that it was being cautious in its forecast. Comparable sales, or those from stores and digital channels operating for at least 12 months, are expected to be down between 2% and 4%. The department-store chain’s annual earnings guidance, meanwhile, was stronger than analysts had been expecting.

For the current fiscal year, Best Buy forecast a 3% to 6% drop in same-store sales. Overall revenue is expected to be between $43.8 billion and $45.2 billion, below the $45.69 billion expected by analysts, according to FactSet. 

Best Buy expects adjusted earnings to be between $5.70 a share and $6.50 a share, also below the $6.72 a share that analysts were looking for.

—Will Feuer contributed to this article.

Write to Suzanne Kapner at [email protected] and Dean Seal at [email protected]

Despite the decline, the company made progress in cutting levels of excess inventory without having to “chase unprofitable sales,” Chief Executive

Jeff Gennette

said. The company’s earnings came in better than expected in the quarter.

Best Buy Inc.

BBY -3.67%

said macroeconomic conditions have continued to weigh on the business and its customers. For the three months ended Jan. 28, Best Buy’s U.S. sales fell nearly 10%, dragged down by soft spending on everything from computers and phones to home theaters and appliances. The company noted some bright spots, reporting growth from videogaming products and tablets.

The results illustrate the challenges that sellers of discretionary goods might have in getting consumers to pay up for items that were purchased en masse earlier in the Covid-19 pandemic. Persistent inflation, shifts in the labor market and a downturn in corners of the stock market have all contributed to a malaise hitting shoppers across the country, retail analysts and executives have said. 

To cope with elevated levels of inflation, people have cut back on some purchases and, in some categories, opted for cheaper, private-label brands.

Walmart Inc.

said it has added more higher-income customers who have been seeking deals on goods.

Sales growth has been easier to come by for purveyors of groceries and food items. Walmart and

Target Corp.

said the food and beverage categories helped them post an increase in sales as more people spend time at and make more food at home. 

Supermarket operator

Kroger Co.

KR 5.16%

on Thursday said that same-store sales, excluding fuel, rose 6.2% in its recently completed quarter from a year ago as shoppers continued to spend on groceries. Results were boosted by a 10% increase in sales from its private-label products, which generally have lower prices than their name-brand competitors.

Inflation is also pushing some of those increases. Consumer prices for food at grocery stores and supermarkets were up 11.3% in January from the same month a year earlier, federal data show.

Kroger said it worked to reduce supply-chain costs in the latest quarter and manage high product-cost inflation by improving its sourcing. Kroger kept its profit margins roughly flat and delivered better earnings than analysts had been expecting.

Forecasts for the current year for a range of retailers have reflected challenges in projecting consumer spending. Furniture and home-decor retailer

Big Lots Inc.

on Thursday said it isn’t providing annual guidance for now, citing greater uncertainty in the macroeconomic environment.

Macy’s said that sales could fall as much as 3% this year, acknowledging that it was being cautious in its forecast. Comparable sales, or those from stores and digital channels operating for at least 12 months, are expected to be down between 2% and 4%. The department-store chain’s annual earnings guidance, meanwhile, was stronger than analysts had been expecting.

For the current fiscal year, Best Buy forecast a 3% to 6% drop in same-store sales. Overall revenue is expected to be between $43.8 billion and $45.2 billion, below the $45.69 billion expected by analysts, according to FactSet. 

Best Buy expects adjusted earnings to be between $5.70 a share and $6.50 a share, also below the $6.72 a share that analysts were looking for.

—Will Feuer contributed to this article.

Write to Suzanne Kapner at [email protected] and Dean Seal at [email protected]