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Following Boom Due Work From Home Measures, Best Buy Warns Of Slowing Sales In Q3


08/26/2020


Following Boom Due Work From Home Measures, Best Buy Warns Of Slowing Sales In Q3
The rising risks of unemployment in the economy, slowing down of novel coronavirus pandemic related stimulus by government and the upending of the global supply chains because of the pandemic induced lockdowns could result in a slowdown in sales growth in the third quarter, warned Best Buy Co Inc.
 
This warning sent the shares of the United States based consumer electronics retailer down by 4 per cent.
 
In the second quarter, the company reported a 20 per cent growth in the sale revenues because of an increase in demand and online sale of computers and other electronic accessories as more people started to work from their homes because of travel restrictions imposed due to the novel coronavirus pandemic. But the company.s Chief Financial Officer Matt Bilunas said that the company expects sales to be somewhat slower for the third quarter. 
 
The additional $600 additional weekly money for the unemployed that was granted by the US government helped the country’s retailers. But that stimulus ended on July 31 following which an executive order was issued by President Donald Trump to extend and continue that stimulus but with a reduced amount of $400.
 
And if the US Congress does not pass a new stimulus package it could result in a spending downturn, retail companies now expect. According to the weekly US jobs report for last week, more than a million Americans had filed for the jobless benefits. That has deflated hopes of a quick recovery in a labor market that has been severely hit by the pandemic.
 
Best Buy also reported a 5.8 per cent growth in comparable sales in the latest reported quarter which beat analysts' average expectation of a 3.7 per cent increase, according to IBES data from Refinitiv.
 
The company said that during the quarter, there was a 4 per cent rise in overall revenue which came in at $9.91 billion with revenues for online sale in the United States increase more than three times than for the same period last year and easily beat expectations of the market which was pegged at $9.71 billion.
 
But the company’s sales was lower than that of the big-box retailer Target Corp, which last eek reported an increase of 24 per cent in comparable sales for the same period.
 
Net earnings Best Buy increased by 81.5 per cent to $432 million during the quarter while it earned $1.71 per share excluding one-time items which also beat the average estimate of $1.08 per share.
 
(Source:www.channelnewsasia.com)


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