Employees bring a TV to Steve Steward’s car at a Best Buy store on Black Friday, which was traditionally one of the busiest shopping days of the year. Crowds are smaller this year due to the growing popularity of online shopping amid concerns about the COVID-19 pandemic.
Paul Hennessy | SOUP Pictures | LightRocket | Getty Images
Best Buy said Thursday that it would prepare for a challenging dynamic in the coming months: rivals are lowering prices to try to keep sales momentum as pandemics fade.
Chief Financial Officer Matt Bilunas said the company expects high sales in the first quarter, but said the profits could weigh. As Best Buy said, some other retailers will be compared to large quantities because of their significant gains during the global health crisis.
“We anticipate more promotional pressure than we experienced this past year as inventory becomes more available and competition is likely to increase,” he said in a call with investors and analysts.
Best Buy is among the retailers that saw sales grow as people were at home during the global health crisis. After being forced to work and learn from home, many consumers had to rush to buy new computer monitors, printers, and other tools. When they started cooking more, they also sought to improve appliances, while others devoted themselves to video games to pass the time. With higher demand and lower inventory, retailers like Best Buy saw items fly off the shelves, even without pushing buyers with tempting sale prices.
Pandemic-fueled demand ripped off Best Buy and other big stores like Walmart and Target in the first quarter of last year, as people faced orders to stay home and began stocking up on what they needed. from groceries to technological equipment.
Sales growth accelerated at Best Buy in the following months, as the global health crisis intensified and consumers ’time at home extended. For Best Buy, sales growth peaked in the third fiscal quarter, which ended Oct. 31, as online and in-store sales for at least 14 months grew 23%.
Target also benefited as its doors remained open during spring closures, with strong sales of consumer electronics and fewer goods ending up on the rack. Its chief financial officer, Michael Fiddelke, said he made a call to investors and analysts that the discount “has sold an above-average mix of our units at a normal price.” He said he reduced the number of promotions to avoid increasing the number of sold out customers facing.
Best Buy exceeded Wall Street revenue expectations for the fourth quarter, but a slowdown in sales sparked a resale on Thursday. Shares fell more than 8% Thursday morning.
The big box retailer said it will face another headwind, especially when people return to pre-pandemic spending habits in the fall and winter. Bilunas said he expects in-store sales to drop by as much as 2% or grow by up to 1% during the fiscal year, as consumers spend their money on eating out or on vacation instead of buying a new laptop or home cinema.