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Expectations Of Strong Electronics Demand Prompts Best Buy To Raise Annual Forecast

Expectations Of Strong Electronics Demand Prompts Best Buy To Raise Annual Forecast
Electronics retailer Best Buy Co Inc expects continued demand for home computer equipment because of the continued trend of work from home even though there are concerns in the industry about a decline in demand because of perceptions that demand had peaked during the pandemic last year. This confidence prompted the company to raise its full-year comparable sales forecast for the entire year.
The company also forecast third-quarter comparable sales to decline by 1 to 3 per cent compared to estimates of analysts of a drop of 9.1 per cent and this installed confidence of investors as Best Buy shares rose by 5 per cent in premarket trading on Tuesday. The stocks have risen by 12.4 per cent so far this year.
With consumers in the United States getting stuck at home last year and forced to work and study from home, the expended more on laptops, webcams and other computer accessories which helped the sales of the consumer electronics retailer to surge over the last year.
There was a 20 per cent growth in comparable sales in the second quarter because of sustained demand and strong US consumer sentiments, said Best Buy Chief Executive Officer Corie Barry. In comparison, analysts had estimated the company to report a growth of 17.2 per cent on average, according to IBES data from Refinitiv.
"Demand was also bolstered by the overall strong consumer spending ability, aided by government stimulus, improving wages and high savings levels," Barry said in a statement.
The company now expects growth of between 9 and 11 per cent in comparable sales for the entire year while its previous forecast was a growth of between 3 and 6 per cent.
The company reported a rise in total revenue to $11.85 billion compared to about $9.91 billion in the second quarter which also beat market expectations of $11.49 billion.
The company earned $2.98 per share, not including one-time items, which was higher than analysts' average estimate of $1.85 per share.

Christopher J. Mitchell

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