Best Buy warns of slowing sales after work-from-home boom – Metro US

Best Buy warns of slowing sales after work-from-home boom

FILE PHOTO: A delivery person passes by a sign for
FILE PHOTO: A delivery person passes by a sign for a new Best Buy store in New York

(Reuters) – Consumer electronics retailer Best Buy Co Inc <BBY.N> 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% on Tuesday after it said sales growth, driven by record online demand for computers and 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.

“The stimulus provided confidence and a backdrop against which customers felt like they had purchasing and spending power,” Best Buy Chief Executive Officer Corie Barry said.

“Going forward a lack of that stimulus may only underscore the heightened levels of unemployment.”

In the second quarter, Best Buy’s comparable sales rose 5.8%, beating the average expectation of a 3.7% increase, according to Refinitiv data, but far short of big-box retailer Target Corp’s <TGT.N> 24% increase.

The company said it was seeing shortages of some gaming products, where sales have been surging, thanks to kids shut at home by school closures.

The availability of Sony Corp’s <6758.T> upcoming PlayStation 5 and Microsoft Corp’s <MSFT.O> Xbox Series X, would be clear only closer to their holiday season launches, Barry said.

The company’s overall revenue rose nearly 4% to $9.91 billion and the company earned $1.71 per share on an adjusted basis, beating analysts’ average estimate of $1.08 per share.

(Reporting by Uday Sampath in Bengaluru; Editing by Patrick Graham and Arun Koyyur)