Best Buy raises annual forecasts as AI spurs device upgrades

Aug 27 (Reuters) - Best Buy raised ‌its full-year sales ​and ​profit forecasts on Thursday, betting on an AI-fueled device upgrade cycle and growth in newer businesses such as advertising and its marketplace to ‌offset weak discretionary spending.

The top U.S. electronics retailer expects annual revenue of $42.3 ⁠billion to $42.8 billion, compared with its earlier forecast of $41.2 billion to $42.1 billion.

The company has benefited from ‌an artificial intelligence-driven hardware upgrade cycle, ‌as shoppers replace older computers and smartphones with ones based on the latest technology.

Still, customers remained conscious of value and were carefully considering big-ticket purchases, even ​as they showed a willingness to replace products when a compelling need arose, the company said in a statement.

U.S. retailers have signaled during the latest earnings ⁠season how consumers, squeezed by higher fuel prices and elevated food costs, have cut back spending on large discretionary ​purchases.

The company's shares, which have gained about 30% so far this year, were down about 3% in choppy premarket trading.

Best Buy also ​raised its forecast for annual earnings per share ‌to $6.70 to $6.90 on an adjusted basis, compared with the $6.30 to $6.60 estimated earlier.

The company projected fiscal comparable sales growth of 1.9% to ⁠3%, raised from its previous forecast range of a decline of 1% to a growth of 1%.

Meanwhile, Best Buy is preparing for a leadership transition, with company veteran Jason Bonfig set ⁠to become the CEO later in the year, succeeding Corie Barry. The retailer has also named ​industry expert Anne Bramman as its new finance chief.

The company reported an adjusted earnings per share of $1.47 for the second quarter, beating analysts' estimate of $1.38, according to data compiled by LSEG.

Best Buy ‌highlighted computing, home theater and emerging categories such as AI glasses and trading cards as the biggest drivers of sales in ‌the quarter.

The company has focused on expanding its marketplace and advertising businesses, which are emerging ⁠as important growth drivers of its ‌gross profit margins.

Tariff refunds ​of about $34 million also lifted domestic gross profit margin during the reported quarter, the company said.

(Reporting by Angela Christy in Bengaluru; Editing by ‌Sriraj Kalluvila)

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