Best Buy posted its biggest same-store sales gain in two years but the retailer’s shares fell on uncertainty over growth in the second half of 2020.
For the second quarter, Best Buy’s comparable sales jumped 5.8%, well above analysts’ estimates of a 2.3% increase even though stores were open by appointment only for the first six weeks of the quarter due to the coronavirus pandemic.
The strong quarter was fueled by a 242% increase in online sales that offset the lost business from temporary store closures.
“Products that help people work, learn, connect and cook at home, like computing, appliances and tablets, were the largest drivers of our sales growth for the quarter,” Best Buy CEO Corie Barry said in a news release.
Overall revenue rose 3.9% to $9.91 billion while net income rose more than 81% to $432 million, or $1.65 per share. Excluding items, Best Buy earned $1.71 per share, beating estimates of $1.08 per share.
But the company’s shares dipped 4.4% to $112.18 as executives took a cautious view of what lies ahead with the coronavirus still raging and government support for the economy uncertain.
“We are planning for Q3 sales to be higher compared to last year but likely will not continue at the current quarter-to-date level of approximately 20% growth,” CFO Matt Bilunas said.
“Overall, as we plan for the back half of the year, we continue to weigh many factors including potential future government stimulus actions, the current shift in personal consumption expenditures from areas like travel and dining out, the possible depth and duration of the pandemic, the risk of higher unemployment over time, and the availability of inventory to match customer demand,” he added.
Barry said in a media call that Best Buy had experienced “more constrained product availability than we expected.”
According to Barron’s, “some investors might worry that consumers already have all they need to hunker down from home for the foreseeable future” but “assuming supply chains remain intact, new videogame title releases and the next wave of handsets could help drive sales into the holidays.”
Noam Galai/Getty Images