By Tonya Garcia, MarketWatch
A previous version of this report included a typo in Best Buy CEO Corie Barry’s name. It has been corrected.
Known as the place to get a new jumbo screen hi-tech TV before the Super Bowl, Best Buy Co. Inc. is also now a retailer of necessities for everyday life during COVID-19, like new computers and items to help with cooking at home.
The consumer electronics retailer reported fiscal second-quarter earnings and revenue that beat expectations early Tuesday, with computing merchandise and appliances called out as big sellers for the quarter. Large appliances and home theater merchandise sales grew as stores opened and the quarter wore on, according to Best Buy /zigman2/quotes/205918291/composite BBY +2.82% Chief Executive Corie Barry.
Best Buy stores were open by appointment only for the first six weeks of the quarter due to COVID-19. As of June 22, nearly all of the company’s stores were open for shopping.
For the first three weeks of the third quarter, sales are up about 20%, Barry said.
“Best Buy’s results demonstrated that there is a significant essential and non-discretionary component to its merchandise mix, as well as validated the quality of its execution ability, and we also note momentum is continuing as evidenced by revenues up around 20% thus far in Q3,” said Charlie O’Shea, Moody’s vice president.
Essential retailers that remained open during lockdown periods of the pandemic include grocers like Walmart Inc. /zigman2/quotes/207374728/composite WMT +0.44% , Costco Wholesale Corp. /zigman2/quotes/201191698/composite COST -0.74% and Target Corp. /zigman2/quotes/207799045/composite TGT -0.32% as well as home retailers like Home Depot Inc. /zigman2/quotes/208081807/composite HD +0.55% and Lowe’s Cos. /zigman2/quotes/205563664/composite LOW +1.40%
Despite the results, Best Buy shares fell 4% in Tuesday trading after the retailer took a cautious tone for the future.
“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,” said Best Buy’s Chief Financial Officer Matt Bilunas in a statement.
Experts and other retailers have talked about the slow start to the back-to-school season and the impact that the ongoing pandemic will have on the shopping calendar heading into holiday shopping.
Gross profit fell due to the costs associated with fulfilling a surge in online orders, said O’Shea.
Online sales grew 242.2% in the second quarter.
Still, the results set Best Buy up for future stock gains, according to CFRA, which identified a few factors working in Best Buy’s favor, including the shift to remote learning, a delay to Amazon.com Inc.’s /zigman2/quotes/210331248/composite AMZN -3.07% Prime Day shopping event, and an upcoming cycle of upgrades to 5G.