RICHFIELD, Minn. — Best Buy, the largest U.S. electronics retailer, said full-year profit and sales will fall more than it projected earlier because of a “seismic” slowdown in consumer spending.
The forecast given Wednesday suggested Target Corp. and other retailers may trail estimates when they report earnings in the next week.
“This is going to be the holiday of socks and underwear for consumers: that dreaded Christmas where that’s all you get,” said Patricia Edwards, the founder of Storehouse Partners LLC and an analyst with nine years of experience covering retailers.
Consumers grappling with rising jobless rates, less credit and declining home values have stopped buying discretionary goods as the holidays approach. Department-store and apparel chains including Nordstrom and AnnTaylor Stores have already projected sales and profit declines as the U.S. economy slumps in what may be the worst recession in three decades.
“Since mid-September, rapid, seismic changes in consumer behavior have created the most difficult climate we’ve ever seen,” Best Buy chief executive Brad Anderson said in the statement. “Best Buy simply can’t adjust fast enough to maintain our earnings momentum for this year.”
Best Buy’s earnings for the year through February 2009 may drop to $2.30 to $2.90 a share from $3.12 last year, the company said.
Revenue from stores open at least 14 months might plunge as much as 15 percent in the four months through February, it said.
Overall holiday sales at older stores may decrease 1 percent from last year, according to a survey released Wednesday by America’s Research Group and UBS AG. America’s Research Group founder Britt Beemer said that’s his first negative forecast in 23 years of conducting Christmas surveys.
“Almost anyone who has not guided up or confirmed their forecast yet may fall short when they report,” said Seattle-based Edwards.
