Best Buy raises full-year sales forecast on stimulus spending boost

(Reuters) -Best Buy Co Inc raised its annual sales forecast on Thursday, saying the latest round of stimulus checks had kept consumers buying home electronics, while acknowledging that a reopening economy threatens to slow growth later in the year.

Shares of the company, which have gained over 20% this year, rose about 5% in morning trading as it also reported better-than-expected first quarter results.

Best Buy was among the biggest retail winners during most of the health crisis last year as stuck-at-home Americans set up remote workspaces and invested in home appliances leading to a surge in sales of laptops, webcams, refrigerators and other electronics.

“We’re still going to see a population that likely is going to be living some hybrid life for the foreseeable future and I think the refresh cycles as a result are going to speed up as people look for that new and better way to work and school from home,” Best Buy Chief Executive Officer Corie Barry said in an analyst call.

However, Barry added it was difficult to gauge the impact on sales from a switch in consumer spending to activities such as eating out, traveling and social events in the later part of the year, and after the stimulus boost peters out.

The company forecast second-quarter comparable sales to rise 17% and expects full-year comparable sales to rise 3% to 6%, compared to a previous forecast range of a fall of 2% to a rise of 1%.

It expects comparable sales to fall in the second half of its fiscal year.

Barry also said Best Buy’s inventory of electronics was largely unaffected by the global semiconductor microchip shortage, but the company was keeping an eye on the changing situation.

The company’s comparable sales rose 37.2% in the first quarter ended May 1, beating analysts’ estimates of a 22.7% increase.

Excluding one-time items, the company earned $2.23 per share, topping estimates of $1.39 per share.

(Reporting by Uday Sampath in Bengaluru;Editing by Vinay Dwivedi)