Best Buy surges as retailer boosts forecast on sales gains

Bloomberg

Best Buy Co entered the holiday shopping season on a positive note after posting quarterly sales that topped estimates and raising its full-year-outlook, sending the shares higher.
Fuelled by demand for appliances, headphones, tablets and services like tech support,
comparable-store sales in the US rose 2%, easily beating analysts’ projections. The Minneapolis-based consumer-electronics retailer also boosted its forecast for that key retail metric and for profit this year, as its hometown rival Target Corp did.
The results bode well for Chief Executive Officer Corie Barry as she faces a major test this holiday period. The new CEO has a high bar to clear as Best Buy has performed well during that stretch for the past two years. Despite a warning in August about “general uncertainty” in demand for its products, as well as the threat of looming tariffs, Chief Financial Officer Matt Bilunas cited “improved expectations” for the current quarter.
The performance was “very impressive,” Moody’s Investor Service analyst Charlie O’Shea said in a note.
“It is more than holding its own against the likes of Walmart, Amazon and Target.”
Best Buy rose as much as 5.8% to $78.54 in New York on November 26, the biggest intraday gain in more than three months.
Best Buy’s resiliency stems from its ability to take care of the basics — stocking the right products at competitive prices — while exploring new areas of opportunity. In this case, the retailer has overcome broader declines in consumer electronics sales by expanding into new areas like services and healthcare, selling goods ranging from fitness machines to
in-home sensor networks for seniors. The healthcare push could deliver as much as $46 billion in additional revenue over the next 10 to 20 years, Morgan Stanley estimates.
Best Buy “has successfully pivoted to a strategy that goes beyond just selling ‘stuff’ to one that includes selling services that help consumers,” Neil Saunders, an analyst at GlobalData Retail, said in a note.
That agility has positioned Best Buy among the winners in a bifurcating US retail industry. Companies like Target, Walmart Inc and Costco Wholesale Corp are taking market share while laggards including JC Penney Co, Macy’s Inc and Kohl’s Corp are losing out.
Retailers at the head of the pack have also found more ways to get their online orders delivered to fend off Amazon.com Inc.
The strategy paid off for
Best Buy last quarter, as comparable online sales increased 15%, topping the gain predicted by analysts.