People wearing masks walk past a large face mask sign in front of a Best Buy near Columbus Circle that as the city enters Phase 4 of re-opening following restrictions imposed to slow the spread of coronavirus in New York City.
Alexi Rosenfeld | Getty Images
Best Buy on Tuesday reported strong second-quarter sales growth, helped by its biggest quarterly increase in online sales ever, as customers bought computers, kitchen appliances and other tech to help them work, cook and attend school at home during the coronavirus pandemic.
Online sales shot up 242% in the U.S. compared with the prior year, as the website drew higher traffic and more people converted from browsing to buying.
Sales at stores open at least a year grew by 5.8%, higher than the 2.3% that Wall Street expected. That same-store sales growth was its highest in two years, even though its stores were open by appointment only for the first six weeks of the quarter.
However, shares of the company were down nearly 7% Tuesday morning, as the company declined to provide an outlook for its future results.
Nearly every merchandise category grew during the second quarter, with computing, tablets and appliances fueling sales. Receipts were down for mobile phones and flat with home theater.
“Everything that people are doing right now is on the back of technology in their home, and it completely underscores our purpose and our philosophy,” CEO Corie Barry said on an earnings conference call. She said consumers are enriching their lives through technology. “We’re seeing it across basically every aspect of what we’re selling in our stores.”
Here’s what the company did in the fiscal second quarter ended Aug. 1:
- Earnings per share: $1.71, adjusted, vs. $1.08 expected by Refinitiv’s consensus estimates
- Revenue: $9.91 billion vs. $9.71 billion expected by Refinitiv estimates
- Same-store sales growth: 5.8% vs. 2.3% expected by FactSet
Chief Financial Officer Matt Bilunas said in a news release he expected to see year-over-year sales growth in the third quarter but warned that growth wasn’t likely to continue at the same pace. He also cautioned that the retailer will have higher expenses as its stores are fully reopened.
“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,” Bilunas said.
Inventory was limited in a number of categories because of higher-than-expected demand. Barry said that cut into sales growth.
Best Buy reported second-quarter net income of $432 million, or $1.65 per share, a significant increase from $238 million, or 89 cents per share, a year earlier.
Excluding items, it earned $1.71 per share, higher than the $1.08 per share expected by analysts surveyed by Refinitiv.
Revenue was $9.91 billion, up from $9.54 billion a year earlier, and higher than analysts expected.
Best Buy switched to a curbside-pickup-only model early in the pandemic, even though it could have kept stores open as an essential retailer. In early May, it began allowing customers to shop at stores by appointment only.
Starting June 22, nearly all of its stores were open to shopping without an appointment and it resumed at-home consultations. It also brought back about half of the 51,000 workers furloughed in April.
With shoppers browsing in stores again, Barry said the retailer has seen positive trends. Sales of large appliances and home theater have picked up. She said in a news release that sales growth across the business was about 16% in the last seven weeks of the second quarter and in the first three weeks of the third quarter, sales were up about 20%.
Read the complete press release here.