Best Buy Co. Inc. (NYSE: BBY) was a hot stock for years. From mid-2020 until late last year, it handily outperformed the market. Investors appeared ready to believe the worst of the COVID-19 pandemic would not badly damage its revenue. Best Buy could live largely on e-commerce and outside store delivery. That was accurate until it was not. Best Buy’s stock is down 35% this year.
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In the first quarter of its fiscal year, which is the most recently reported, revenue dropped from $11.6 billion a year ago to $10.6 billion. Net earnings declined from $595 million to $341 million. Domestic comparable store sales dropped 8.5%. Even worse, domestic online sales fell 14.9% from the same quarter a year ago. E-commerce was supposed to be the strength that would keep Best Buy’s growth in place.
Guidance numbers were even uglier. Corie Barry, the company’s CEO, said “We are revising our full-year financial guidance to reflect our best estimate of how the year will play out based on the trends we have been seeing over the past several weeks and our forecast for the back half of the year at this point in time.”
Best Buy’s largest hurdle near term is the holiday season. Like most retailers, the period is essential to annual success. A recession, which is either coming or already has started, will rob Best Buy of any improvement year over year. That will disappoint investors even more.
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