The United States based electronics retailer Best Buy notched up its largest quarterly sales growth in 25 years in the three months ending on October 31 as the company benefitted significantly from the rising trend of consumers purchasing laptops, home theatre systems, kitchen appliances and other electronics products with such consumers being forced to spend more time at home and work from home because of the novel coronavirus pandemic.
There was a 23 per cent year on year growth in sales at stores open for at least one year in the third quarter, said the electronics retailer. This rate of quarterly frowht was the the highest for the company in the last 25 years.
Home delivery and curbside pickup sales accounted for most of the growth reported by Best Buy for the quarter. More than one third of the company’s sales were accounted for by its online sales which increased by a massive 174 per cent in the latest completed quarter.
In the third quarter, net sales of Best Buy increased to $11.9 billion while its profit increased to $391 million.
Some parts of the retail sector have seen strong growth during the pandemic even though department stores and mall-based clothing retailers have struggle.
With consumers choosing to divert money set aside for travel, leisure and other services into purchasing products from sectors such as electronics, home improvement and sporting goods which benefitted Best Buy significantly. There was a 23.2 per cent growth in the last quarter in sales at stores open for at least one year, Dick’s Sporting Goods said Tuesday.
A strategy of mix of stores and strong online presence was the driver of Best Buy’s pandemic success, according to analysts.
“When it comes to higher-priced electronics, consumers are more confident purchasing from a retailer with stores, especially if they want to see and experience products before they buy,” Neil Saunders, managing director of GlobalData Retail, said in a research note Tuesday.
“They also often prefer the immediacy of collection from store or curbside collection. Best Buy’s model delivers on both these fronts and is serving it very well,” he added.
There was a drop of 5 per cent in the shares of Best Buy during premarket trading on Tuesday despite the record quarterly performance of the company.
But the company has gained as much as 40 per cent to its stock price from year to date so far. However questions about how much longer would it be possible for the stock to sustain the current breakneck pace were raised by some investors.
No financial guidance for the holiday period or 2021was provided by Best Buy.
“While the demand for the products and services we sell remains at elevated levels as we start the fourth quarter, it is very difficult for us to predict how sustainable these trends will be due to the significant uncertainty related to the various impacts of the pandemic,” Best Buy CFO Matt Bilunas said in a statement.
(Adapted from CNN.com)