Best Buy announced Thursday that sales increased 36% in the first quarter of the fiscal year Consumer electronics.
Shares in the company 3.3% in premarket trading after the home electronics and appliances retailer raised its forecast.
Corie Barry, CEO of Best Buy, said consumers decided to invest in technology and kitchen appliances as home values rose. She said demand was “extraordinarily high” over the three month period.
“This demand is driven by the continued focus on the home, which encompasses many aspects of our lives including working, learning, cooking, entertaining, renovating and remodeling,” she said in a statement. “Demand was also supported by government stimulus programs and the strong residential environment.”
This has raised the retailer’s expectations for the first half of the year. CFO Matt Bilunas said Best Buy expects sales to grow 3% to 6% in the same store this year. He had previously said that they would range from a 2% decrease to a 1% increase. However, he said the company expects customers to increase their spending in other areas like travel and restaurants in the second half of the year.
The company reported for the fiscal quarter ended May 1, versus Wall Street’s expectations, based on an analyst survey by Refinitiv:
- Earnings per share: $ 2.23 adjusted versus $ 1.39 expected
- Revenue: $ 11.64 billion versus $ 10.44 billion expected
Best Buy’s net income rose to $ 595 million, or $ 2.32 per share, for the first quarter from $ 159 million, or 61 cents per share, a year earlier.
Excluding items, it made $ 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 last year, beating estimates of $ 10.44 billion.
Sales on the Internet and in stores that have been open for at least 14 months rose 37.2%, above the 22.4% growth that analysts expected in a StreetAccount survey. The company saw sales growth in nearly all categories, with the largest increases in home theater, computers and appliances.
On a call to win, Barry said total new customer growth is about 50% higher than before the pandemic. However, these customers look different: slightly younger, more female, and slightly lower-income, she said.
And for the first time in the past 12 months, millennials were the retailer’s largest group of customers, she said.
This is the first quarter that Best Buy has been compared to its business year over year during the pandemic. A year ago, the retailer saw unusual shopping patterns as Americans prepared for long stays at home and quickly moved to work and school from afar. Sales initially rose and then declined in the year-ago quarter when the retailer decided to temporarily close stores and switch to a street-only pickup model.
Best Buy is betting that the pandemic will permanently change consumer behavior – and has said that this will mean changes to the workforce and stores. The company laid off around 5,000 employees in early February and announced that its nationwide store space will shrink as it reviews lease renewals.
Barry said Thursday that the company is trying to better understand the role of business in the future and has started testing different formats. A store with a smaller retail space and a larger back room is being piloted to fulfill online orders. A more experimental store has also opened in Houston, where customers can try out games and fitness items, try premium home theater setups, and consult with a larger Geek Squad team.
Later that year, Barry said, Best Buy will try other store prototypes that vary in size, including a new outlet store.
“We’re testing the right mix of experience, space and location, and all of these things have to work together in the right way,” she said. “We obviously feel urgent. We want to make sure we find out – but we don’t want to be so urgent that we risk the customer and, luckily, the employee experience in this job. And it’s important to know that we are . ” not even in a normalized environment. “
At the close of trading on Wednesday, Best Buy shares were up 17% this year. Shares hit a 52-week high of $ 128.57 earlier this month, closing at $ 116.96 on Wednesday. The company’s market value is $ 29.29 billion.
Read the company’s press release here.