It seems as if the early pandemic bump in electronics sales might finally be wearing off, as Best Buy said via press release (opens in new tab) and conference call earlier today that it expects its 3.9% growth rate from 2020’s first two quarters to wane as it moves into August. According to Reuters, this news caused the company’s shares to fall up to 7.4% in early trading shortly after the announcement, and might be the result of continued unemployment, supply chain hiccups and decreased government stimulus.
With many Americans shifting to home offices and the government sending out stimulus checks to curb a potential recession, the early days of the pandemic were actually a period of growth for big box stores like Best Buy. Today, the company announced that it saw online sales rise 242% during its second quarter compared to the same period last year. This came not just from home office gear and other productivity equipment, but also in areas like gaming, thanks to kids being stuck at home with few other avenues for socializing.
This allowed Best Buy to recall about half of the 51,000 employees it furloughed in mid-April, back when demand was harder to anticipate and in-store shopping was limited to appointments and curbside pickup. Now, almost all of Best Buy’s locations are open for in-store shopping without an appointment, but Best Buy CEO Corrie Barry explained on a conference call today that the re-opening has presented an unexpected difficulty.
“The stronger-than-anticipated demand as we opened our stores for shopping resulted in more constrained product availability than we expected,” she explained.
When taken in conjunction with the risk of higher unemployment rates over time and fewer unemployment benefits, as well as new fears that a second stimulus check might never arrive, this lead Barry to elaborate that the company expects its upcoming third quarter to “be more in line with last year’s third quarter.”
That news is a little surprising given that Best Buy’s sales for the first three weeks of August were up 20%, but with the company unsure about the “possible depth and duration of the pandemic,” it said that it is “not providing financial guidance today.”