Best Buy (BBY 2.60%) investors are in for a volatile trading week. The retailer is expected to announce on Nov. 23 that sales declined year over year after soaring over the last few quarters. Profitability might take a small step backward, too, thanks to rising supply chain costs.

However, this latest earnings report is also likely to be packed with good news about the business in terms of both big-picture growth trends and the earnings outlook heading into the core holiday shopping season.

Let's take a closer look at what to expect when Best Buy reports fiscal 2022 third-quarter earnings on Tuesday.

A customer shops for a new TV.

Image source: Getty Images.

Sales compared to 2019

Yes, revenue is on pace to drop when compared to booming results in late 2020. CEO Corie Barry and her team said back in August that Q3 comparable-store sales might fall by between 1% and 3%. Wall Street is looking for quarterly revenue to decline to about $11.5 billion from $11.8 billion last year.

It will be more useful to follow Best Buy's bigger-picture growth trends that aren't sensitive to the timing of pandemic store reopenings. On that basis, sales were up 24% last quarter compared to the same period in 2019. Look for executives to highlight similarly strong two-year growth on Tuesday despite headwinds like reduced government stimulus and a shift back toward in-person shopping.

Will Best Buy flex its pricing power?

Best Buy should have even better news to report on the earnings front. There's no shortage of profit pressures around, including higher supply chain costs and increased wages. But Best Buy should flex its pricing power through those challenges, with help from higher sales of premium consumer electronics and appliances.

BBY Operating Margin (TTM) Chart

BBY Operating Margin (TTM) data by YCharts

Executives said back in August that demand from consumers looking to upgrade their smartphones, home theater tech, and computers was strong. If that positive selling environment persisted through Q3, then operating margin likely continued climbing up toward record highs for the business.

The holiday outlook

The big question heading into Tuesday's report is the scale at which consumers are tempering their tech device spending as more parts of the economy reopen following pandemic lulls. Travel and dining out are two categories that might start recapturing part of that spending in late 2021 and into 2022.

Yet Best Buy should still have a bright outlook for the holiday quarter that will convince management to raise their 2021 forecast. Currently, that prediction calls for sales to land between $51 billion and $52 billion as comps grow by about 10% this year.

The earnings picture will depend on shoppers' spending actions over the next few weeks and on Best Buy's ability to keep the right inventory in its stores through the holidays. Those big variables mean that management won't have a precise forecast for shareholders about Q4, which Wall Street currently expects to show another modest year-over-year sales drop, to $16.6 billion.

The bigger picture is bright given that the retailer is entering the holiday season with some of the strongest demand momentum the business has ever seen. Revenue might decline slightly compared to the spike in late 2020, but the chain is on pace to show much stronger sales this year as its profitability roughly doubles compared to pre-pandemic levels.