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Best Buy reports surprisingly strong Q2 sales and earnings

25 August 2021
 Dan Ackermann

Best Buy reportedsurprisingly strong Q2 sales and earnings. The company also had some surprising things to say about customer behavior. Bullish things.

Why it matters: The distribution of COVID vaccines and the reopening of the economy came with an expected shift in spending toward experiences and less on goods.

  • Best Buy’s robust 19.6% jump in comparable-store sales suggests there’s still plenty of demand for the electronics that make being at home more comfortable and enjoyable.

What they’re saying: "Our original outlook also reflected a scenario in which customers would resume or accelerate spend in areas that were slowed during the pandemic, such as travel and dining out," Best Buy CFO Matt Bilunas said on a Tuesday call with analysts.

  • "Although we are seeing some shift in consumer spending occur, the impact has been less pronounced than we previously anticipated."

Zoom out: The pandemic has changed the way people live and work. And companies like Best Buy have been in a position to win.

  • "There has been a dramatic and structural increase in the need for technology," said CEO Corie Barry.
  • She added that customers have an "elevated appetite to upgrade" due to continual tech innovations. And purchasing patterns reflect "permanent life changes, like hybrid work and streaming entertainment content."

Between the lines: Barry notes that they’ve seen some consumer spending shift away from experiences as COVID cases have risen.

  • "But we've just seen this growth continue, honestly, in both experiences and on the retail side," Barry said.
  • She attributed this ability to spend to the consumer having saved a lot of money during the pandemic, leaving them with cash and borrowing capacity to unleash.

The big picture: Business strength amid rising COVID cases is not just a Best Buy story, says Lori Calvasina, RBC Capital Markets head of U.S. equity strategy.

  • "A sizable majority [of S&P 500 companies that announced earnings last week] have emphasized the strong demand, with a noteworthy minority commenting on decelerating growth," Calvasina wrote in a research note.

The bottom line: As long as the Delta variant lingers, uncertainty will remain elevated. So far, consumer spending has been pretty resilient.

Transcripts show George Floyd told police "I can't breathe" over 20 times

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Newly released transcripts of bodycam footage from the Minneapolis Police Department show that George Floyd told officers he could not breathe more than 20 times in the moments leading up to his death.

Why it matters: Floyd's killing sparked a national wave of Black Lives Matter protests and an ongoing reckoning over systemic racism in the United States. The transcripts "offer one the most thorough and dramatic accounts" before Floyd's death, The New York Times writes.

The state of play: The transcripts were released as former officer Thomas Lane seeks to have the charges that he aided in Floyd's death thrown out in court, per the Times. He is one of four officers who have been charged.

  • The filings also include a 60-page transcript of an interview with Lane. He said he "felt maybe that something was going on" when asked if he believed that Floyd was having a medical emergency at the time.

What the transcripts say:

  • Floyd told the officers he was claustrophobic as they tried to get him into the squad car.
  • The transcripts also show Floyd saying, "Momma, I love you. Tell my kids I love them. I'm dead."
  • Former officer Derek Chauvin, who had his knee on Floyd's neck for over eight minutes, told Floyd, "Then stop talking, stop yelling, it takes a heck of a lot of oxygen to talk."

Read the transcripts via DocumentCloud.