Employees bring a television to Steve Steward’s car at a Best Buy store on Black Friday, traditionally one of the busiest shopping days of the year. The crowd is smaller this year due to the growing popularity of online shopping amid concerns over the COVID-19 pandemic.
Paul Hennessy | SOPA Images | LightRocket | Getty Images
Best Buy said on Thursday that it will be for a challenging dynamic over the next few months: opponents lower prices to try to maintain sales momentum as the pandemic backwind fades.
CFO Matt Bilunas said the company expected sales to increase in the first quarter, but the profit could be weighed. Like Best Buy, he said, other retailers would be compared to large numbers because of their significant gains during the global health crisis.
“We expect more promotional pressure than we have experienced in the past year as stocks become available and competition is likely to increase,” he said in a call with investors and analysts.
Best Buy is one of the retailers that is seeing sales increase as people are picked up at home during the global health crisis. After being forced to work and learn at home, many consumers quickly had to buy computer monitors, printers, and other tools. When they started cooking more, they also tried to upgrade appliances, while others turned to video games to spend time. With greater demand and lower inventory, retailers like Best Buy have seen articles fly off the shelves – even without enticing buyers with attractive selling prices.
Demand fueled by the pandemic began in the first quarter of last year at Best Buy and other big box stores such as Walmart and Target when people faced home orders and began to stock up on what they needed , from groceries to technological equipment.
Sales growth at Best Buy accelerated in the following months as the global health crisis intensified and extended the time of consumers at home. For Best Buy, sales growth peaked in the fiscal third quarter, which ended on October 31, as sales online and in stores opened at least 14 months, grew by 23%.
Target also benefited from opening its doors during the spring lockout – with strong sales in consumer electronics and fewer merchandise on the clearing shelf. His chief financial officer, Michael Fiddelke, said in a call with investors and analysts that the discount “sold higher than the average mix of our units at regular price.” He said this reduces the number of promotions to prevent the number of out-of-stock that customers face from increasing.
Best Buy exceeded expectations for Wall Street for the fourth quarter, but the slowdown in sales on Thursday led to declining sales. Shares fell more than 8% on Thursday morning.
The big box retailer said it was going to get another headwind, especially as people return to pre-pandemic spending habits in the fall and winter. Bilunas said it expects sales in the same store to drop by as much as 2% or grow by up to 1% for the financial year, as consumers spend their money on dining or holidays rather than buying a new laptop or home theater buy.