Best Buy's Q1 results shows inflation's bite

NEW YORK (AP) — Best Buy Co. posted first-quarter results that showed shoppers pulled back on spending, while higher costs ate into profits.

The nation's largest consumer electronics chain also on Tuesday cut its annual outlook, citing a deteriorating economic environment.

Best Buy was among a handful of big winners in the pandemic, as shoppers flocked to its store and website to buy equipment like laptops to create home offices to help them with remote work or cater to the needs of their children for virtual learning. But like many retailers, Best Buy is struggling with rising costs for everything from labor to shipping as supply chain backups hit companies worldwide. The electronics chain also had to navigate global chip shortages. Another round of COVID-19 lockdowns in China is only worsening the problem. And soaring fuel costs are hurting the bottom line.

Meanwhile, consumers' demand for electronics is cooling as they go back to the office and resume more normal lives. Inflation is also making shoppers scrutinize their purchases.

Best Buy CEO Corie Barry said in a statement that the company had expected this year's results to be weaker than last year as it lapped stimulus payments and other government support and planned for higher costs in its supply chain. But she noted that macro economic conditions worsened since it provided its financial outlook in early March, which resulted in its sales being slightly lower than its expectations. Those trends have continued into the second quarter and, as a result, it revised its sales and profitability expectations for the year.

Neil Saunders, managing director at GlobalData Retail, said given the multitude of challenges, Best Buy fared reasonably well. It noted that while Best Buy has suffered from out-of-stocks because of supply issues, it still has better availability...