Best Buy said Thursday that sales grew 36% in the fiscal first quarter as shoppers’ stimulus-fueled spending spree included consumer electronics.
Shares closed the day up 1% to $118.14, after the home electronics and appliance retailer raised its forecast.
Best Buy CEO Corie Barry said consumers decided to invest in technology and kitchen appliances as they saw home values rise. She said demand “was extraordinarily high” in the three-month period.
“This demand is being driven by continued focus on the home, which encompasses many aspects of our lives including working, learning, cooking, entertaining, redecorating and remodeling,” she said in a statement. “The demand was also bolstered by government stimulus programs and the strong housing environment.”
That lifted the retailer’s expectations for the first half of the year. Chief Financial Officer Matt Bilunas said Best Buy expects same-store sales to grow 3% to 6% this year. He had previously said they would range from a decline of 2% to growth of 1%. However, he said the company anticipates customers will step up spending in other areas, such as travel and dining out, in the second half of the year.
Here’s what the company reported for the fiscal quarter ended May 1 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $2.23 adjusted vs. $1.39 expected
- Revenue: $11.64 billion vs. $10.44 billion expected
Best Buy’s first-quarter net income rose to $595 million, or $2.32 per share, up from $159 million, or 61 cents per share, a year earlier.
Excluding items, it earned $2.23 per share, more than the $1.39 per share expected by analysts surveyed by Refinitiv.
Net sales rose to $11.64 billion from $8.56 billion a year earlier, outpacing estimates of $10.44 billion.
Sales online and at stores open at least 14 months grew by 37.2%, higher than 22.4% growth that analysts expected in a StreetAccount survey. The company said it had sales growth across almost all categories, with the largest gains in home theater, computing and appliances.
Barry said on an earnings call that total new customer growth is about 50% higher than pre-pandemic levels. Those customers look different, however: slightly younger, more female and slightly lower income, she said.
And for the first time the retailer’s largest cohort of shoppers over the past 12 months is millennials, she said.
This is the first quarter when Best Buy is facing year-over-year comparisons to its business during the pandemic. A year ago, the retailer saw unusual shopping patterns play out as Americans prepared for long stays at home and quickly shifted to working and attending school remotely. Sales initially spiked and then dropped off in the year-ago quarter, as the retailer chose to temporarily shut stores and switch to a curbside pickup-only model.
Best Buy is betting that the pandemic will permanently change consumer behavior — and has said that will mean changes to its workforce and stores. The company laid off about 5,000 employees in early February and has said its nationwide store footprint will shrink as it reviews lease renewals.
Barry said on Thursday’s earnings call that the company is trying to better understand the role of stores in the future and has started to test different formats. It is piloting a store with a smaller sales floor and a larger backroom to fulfill online orders. It also opened a more experiential store in Houston where customers can try gaming and fitness merchandise, check out premium home theater setups and consult with a larger Geek Squad team.
Later this year, Barry said, Best Buy will try out other store prototypes that vary in size, including a new outlet store.
“We’re testing for the right mix of experience, space and location, and all those things need to play together in the right way,” she said. “We obviously feel urgency. We want to make sure that we figure this out — but we don’t want to be so urgent that we risk the customer and thankfully also the employee experience in this work. And it’s important to note we’re not even in a normalized environment yet.”
As of Thursday’s close, Best Buy shares are up 19% this year. Shares hit a 52-week high of $128.57 earlier this month. The company’s market value is $29.58 billion.
Read the company’s press release here.