Best Buy warns of slowing sales after remote work boom

Consumer electronics retailer Best Buy 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 percent 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 percent.

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 percent, beating the average expectation of a 3.7 percent increase, according to IBES data from Refinitiv, but far short of big-box retailer Target’s 24 percent 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’s upcoming PlayStation 5 and Microsoft’s 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 percent to $9.91 billion as US 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.