Best Buy warns of slowing sales after work-from-home boom
Reuters
Published Aug 25, 2020 07:24AM ET
Updated Aug 25, 2020 11:20AM ET
(Reuters) - Consumer electronics retailer Best Buy Co Inc (N:BBY) warned of a slowdown in sales in the third quarter as it faces risks from the coronavirus pandemic including unemployment, lower government stimulus and potential product shortages.
The company's shares fell as much as 7.4% in early trading on Tuesday after it said sales growth, driven by record online demand for computers and other electronic accessories since March, would ease from current levels of around 20%.
Retailers like Best Buy have benefited from the trillions of dollars in unemployment checks and other aid pumped into households during the crisis, but consumer spending is expected to slow as job losses become permanent and recession sets in.
In the second quarter, Best Buy's comparable sales rose 5.8%, beating the average expectation of a 3.7% increase, according to IBES data from Refinitiv, but far short of big-box retailer Target Corp's (N:TGT) 24% increase.
The company also said it was seeing shortages of some high-demand products, especially in the gaming category, where sales have been surging, thanks to kids shut at home by school closures and other restrictions.
Best Buy Chief Executive Officer Corie Barry said the availability of Sony Corp's (T:6758) upcoming PlayStation 5 and Microsoft Corp 's (O:MSFT) Xbox Series X, would be clearer only closer to their launches during the holiday season.
"Production and manufacturing facilities are running at holiday levels, and we're working with our vendor partners to get ourselves back into a healthier inventory position," Barry said.
Overall revenue rose nearly 4% to $9.91 billion as U.S. online sales more than tripled.
Excluding one-time items, the company earned $1.71 per share, beating the average estimate of $1.08 per share.
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Written By: Reuters
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