Best Buy Boosts Outlook After Sales Top Views; Shares Gain

(Bloomberg) -- Best Buy Co. rose the most in 13 months on Tuesday after it raised its full-year sales outlook on continued strong demand for its gadgets and services.

• The key metric of U.S. same-store sales rose 21% in the second quarter, the retailer reported in a statement. That’s above the 18.4% average estimate from analysts compiled by Bloomberg.
• It now sees companywide same-store sales growing in a range of 9% to 11% this year, much higher than the previous range the electronics retailer offered earlier this year. The company had previously said that it would be difficult to know how consumer behavior would evolve in the back half of the year as people spent more time on activities and traveling.
• See more details.

Key Insights

• The performance came against an unusual period last year, Chief Executive Officer Corie Barry said in the statement, as its stores then were limited to curbside pickup for about half the quarter due to closures imposed during the early days of the pandemic. Compared with the more typical 2019 period, results were still “very strong,” she said, with revenue up 24% and operating profit more than doubling.
• The company said gross profit margins should widen slightly this year, compared with its earlier forecast of little change, citing second-quarter margins that topped expectations. It also provided a forecast for the third quarter, when it sees comparable sales declining between 1% and 3% due to difficult comparisons with 2020.
• The second-quarter beat was fueled by sales of home theaters, appliances, computers and mobile phones. Online sales declined 28% on a comparable basis in the period, Best Buy said.

Market Reaction

• Best Buy shares rose as much as 6.9% in New York trading, the most since July 22, 2020. The stock was up 12% this year through Monday, compared with 19% for the S&P 500 index.

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• See Best Buy estimates.

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