Best Buy warns of slowing sales after work-from-home boom

(Reuters) – Best Buy Co Inc (BBY.N) warned on Tuesday of a slowdown in sales growth in the third quarter as it faced risks from unemployment, lower government stimulus and lockdown-hit global supply chains, sending the shares of the U.S. consumer electronics retailer down 4%.

Chief Financial Officer Matt Bilunas said sales would likely slow from the 20% growth that the company has seen due to a surge in online demand for computers and other electronic accessories from more people working from their homes.

U.S. retailers have benefited from the government’s $600 additional weekly checks for the unemployed, which ended on July 31, after which President Donald Trump issued an executive order to extend it at a reduced rate of $400.

Companies are now preparing for a spending downturn if Congress does not pass a new stimulus package. More than a million Americans filed for jobless benefits, the last weekly U.S. jobs report showed, souring hopes of a quick recovery in a labor market crippled by the COVID-19 pandemic.

In the reported quarter, Best Buy’s comparable sales rose 5.8%, beating analysts’ average expectation of a 3.7% increase, according to IBES data from Refinitiv.

Overall revenue rose nearly 4% to $9.91 billion as U.S. online sales more than tripled and beat market expectation of $9.71 billion.

However, its sales lagged that of big-box retailer Target Corp (TGT.N), which reported a 24% increase in comparable sales last week.

Best Buy’s net earnings rose 81.5% to $432 million in the quarter. Excluding one-time items, it earned $1.71 per share, beating the average estimate of $1.08 per share.