(Reuters) – Best Buy Co Inc held back its holiday-quarter view and warned on Tuesday that a boom in work-from-home purchases was likely to lose steam as rising COVID-19 infections in the United States threaten to eat into pre-Christmas consumer confidence.
The electronic retailer, whose third-quarter sales and profit beat market expectations, said it does not expect quarterly revenue growth of more than 20% to continue into the holiday season, sending its shares down 6% in early trading.
“It continues to be difficult to predict how sustainable these trends will be. We are seeing COVID cases surge throughout the U.S. and Canada at a time of significant holiday volume through our stores,” Chief Financial Officer Matt Bilunas said, pointing to high unemployment.
At least 20 million Americans were on unemployment benefits at the end of October and about 12 million of them will lose benefits when two government-funded programs expire a day after Christmas. Another rescue package for businesses and the unemployed is unlikely before then.
CFO Bilunas said fourth-quarter sales for one of the few retail winners in the health crisis have been strong so far, but that was due to new game consoles from Sony Corp and Microsoft Corp as well as an earlier than ever start to holiday promotions.
“We don’t expect sales trends to remain at the levels we experienced during Q3,” he said on a call with analysts.
Meanwhile, Chief Operating Officer Mike Mohan said supplies of the hot new consoles will be limited through the holiday season.
Best Buy’s comparable sales jumped 23% in the quarter ended Oct. 31, beating expectations of a 14.7% increase, according to IBES data from Refinitiv. It plans on resuming share buybacks this month.
Total revenue rose 21.4% to $11.85 billion, while the company earned $2.06 per share, beating analysts’ average estimate of $1.70 per share.
(Reporting by Uday Sampath in Bengaluru; Editing by Arun Koyyur)