Best Buy Co. sales and profits jumped sharply this spring as consumer demand for technology and home products rose more quickly than company executives and investors expected.
Its financial results for February through April, released this morning, were always going to look good against the year-ago period when the pandemic initially caused store closings. But Best Buy’s results amounted to the biggest gains in recent memory and even easily beat the comparable period of 2019.
“Customer demand for technology products and services during the quarter was extraordinarily high,” said Best Buy CEO Corie Barry, in a statement.
The company earned $595 million, or $2.32 a diluted share, in the three months ended May 1, the first quarter of its fiscal year. Revenue was $11.6 billion, up 36% from $8.6 billion a year ago and up 28% from $9.1 billion two years ago.
Executives raised their outlook for the rest of the fiscal year, which led to a 3% jump in Best Buy’s shares in premarket trading activity this morning.
“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,” Barry said.
Stimulus payments and the strong housing market attributed to growth, she said. Customers continued to focus on products to improve their lives at home with the biggest sales gains coming from home theater, computing and appliances.
It’s a big change from a year ago. Last year, the company’s first-quarter comparable sales fell nearly 6% and its overall revenue declined more than 6% as it closed its stores in March to foot traffic. It would phase into fully opening in later months.
Earlier this year, company leaders said a slowdown could occur as concerns over COVID-19 recede and consumers resume normal spending habits including more spending on travel and eating out.
But with sales better than expected, Best Buy adjusted its outlook for the rest of the year saying it expected comparable sales to jump 3% to 6% instead of a more modest prediction in February that sales could range from falling 2% to increasing 1%.
They expressed some caution about the third and fourth fiscal quarters, in part because they suspect consumers won’t be spending as much time indoors or out shopping.
“As we think about the back half of this year, we expect shopping behavior will evolve as customers are able to spend more time on activities like eating out, traveling and other events,” Matt Bilunas, Best Buy’s chief financial officer, said in a statement. “It is difficult to know exactly how that impacts our business,especially as we lap particularly strong sales in the back half of last year.”