Best Buy Is Best of Breed in Retail’s Meltdown

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After shocking results from Target, Walmart and others, the electronics giant gets credit for making the best of a worst-case scenario for retailers

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Overall, Best Buy’s results are another sign that goods spending is shifting away from things that support customers’ home lifestyles during the pandemic. According to remarks from Chief Executive Officer Corey Barry, the worst-performing categories include computing and home theater.

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But Best Buy’s results also highlight the fact that good planning goes a long way. The company was not immune to some of the profit pressures it may have on retail, including higher supply-chain costs and greater promotional activity (especially in TV, marking some Target). However, its operating costs are down about 5% compared to the year-ago period — a bigger drop than Wall Street expected. In particular, Best Buy’s decision to reduce its head count and move to a flexible workforce model (whereby employees can train to wear different hats on different shifts) during the pandemic is particularly important. appears at a time when other retailers, such as Walmart,

High labor expenditure had a major impact on their margins. Even though Best Buy’s revenue expectations for the year are much worse than previous guidance, its operating margin is expected to decline only slightly: Guidance now calls for an operating margin of 5.2% to 5.4%, compared to the previous 5.4% view. does.

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Two other details stand out. One is that appliance sales at Best Buy continued to grow, even as Target last week marked weak kitchen appliance sales. Comparable-store sales of appliances in the US grew 3% last quarter compared to a year ago. Analysts were expecting a drop of about 6%. The right assortment of goods and good service go a long way. And while other retailers have seen ballooning inventory levels (Target and Walmart’s grew 32% and 43%, respectively), Best Buy’s inventory expanded a more modest 9% last quarter compared to a year ago — something Ms. Barry credits proactive inventory management. ,

Shares of Best Buy, which rose about 1.7% in Tuesday morning trading, are still down more than 27% this year. It compares favorably with Target and Amazon,

Best Buy can’t do much to control the outside forces that are driving consumer-goods spending away, but it seems to be doing a better job than others that it can control.

Write Jinjoo Lee at [email protected]

Credit: www.Businesshala.com /

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