Best Buy's earnings fall in first quarter, after initial sales surge during pandemic

Key Points
  • Best Buy had a wave of sales early in the coronavirus pandemic, as customers bought kitchen appliances, computer monitors and other items to help them set up home offices and settle in for long stays at home.
  • CEO Corie Barry said Thursday that the company retained 81% of its sales in the last six weeks of the quarter from a year earlier, despite switching to a curbside-only model.
  • The retailer furloughed about 51,000 employees and took other cost-cutting measures in mid-April.
  • In May, the company began reopening some of its stores to customers — but only by appointment.
David Paul Morris | Bloomberg | Getty Images

Best Buy said Thursday its revenue and earnings fell in the first quarter, despite an initial surge of shopping as customers set up their home offices and prepared for kids to attend school remotely during the pandemic.

The retailer's sales were also affected later in the quarter, as it decided to shut stores to customers and switch to only curbside pickup outside of them. It also temporarily suspended all in-home installations and repairs.

Best Buy shares were down about 3% Thursday afternoon.  

CEO Corie Barry touted the company's ability to adapt and keep serving customers, even as it restricted access to its stores. She said it retained about 81% of last year's sales during the last six weeks of the quarter "even though not a single customer set foot in our stores."

"The strong sales retention is a testament to the strength of our multi-channel capabilities and the strategic investments we have been making over the past several years," she said in a news release.

Online sales shot up in the U.S. by 154.4% from a year earlier, but that became the only way for customers to shop at Best Buy.

Here's what Best Buy reported for the first quarter ended May 2:

  • Earnings per share: 67 cents, adjusted
  • Revenue: $8.56 billion
  • Same-store sales: down 5.3%

Best Buy said first-quarter net income fell to $159 million, or 61 cents per share, from $265 million, or 98 cents per share, a year earlier. Excluding items, Best Buy earned 67 cents per share. Analysts were expecting Best Buy would earn 44 cents per share, according to Refinitiv. 

The company's revenue fell to $8.56 billion, from $9.14 billion a year earlier, beating analysts' estimate of $8.16 billion.

Best Buy's same-store sales were down 5.3%. Analysts estimated same-store sales would drop by 10%. 

Domestic same-store sales were down 5.7%. International same-store sales were down 0.2%.

The retailer had a wave of sales early in the coronavirus pandemic, as customers bought kitchen appliances, computer monitors and other items to help them work, cook and learn during long stays at home.

In mid-March, Best Buy withdrew its fiscal 2021 financial outlook. It also drew the full amount of its $1.25 billion revolving credit facility and suspended all share buybacks.

Chief Financial Officer Matt Bilunas said Thursday the company isn't providing guidance because of uncertainty around Covid-19.

"We remain thoughtful about managing our profitability and liquidity, balancing our short-term decisions to navigate this unprecedented situation while preserving the elements of our strategy that will ensure we remain a vibrant company in the future," he said in a news release.

The company shut its stores to customers in late March, but continued to sell online and offer curbside pickup. In mid-April, however, Barry said the company would furlough about 51,000 employees and take other cost-cutting measures. 

Best Buy began to reopen some of its stores to customers in early May, but only by appointment. Its employees have stepped up safety measures, including wearing masks and gloves, escorting each customer at a social distance and wiping down everything the customer touches.

Read the full press release here.

Future of retail involves stores: Cowen retail analyst
Future of retail involves stores: Cowen retail analyst