FILE PHOTO: The Best Buy logo is seen at a store in Manhattan, New York City, U.S., November 22, 2021. REUTERS/Andrew Kelly
November 23, 2021
By Uday Sampath Kumar
(Reuters) -Best Buy Co Inc on Tuesday projected quarterly sales below market estimates, a sign that shortages of electronic products would hamper its business during the crucial holiday season.
The forecast sent the retailer’s shares tumbling 14% and reflected the toll of shipping logjams, shuttered factories and a scarcity of raw materials that have ripped through global supply chains this year.
Best Buy is facing supply constraints in categories such as appliances, mobile phones and gaming, Chief Executive Officer Corie Barry said on a post-earnings call.
Sony Corp and Microsoft have struggled to keep the latest versions of their gaming consoles in stock since their launch a year ago due to a widespread chip crunch, while some analysts have warned Apple Inc’s latest iPhones could be in short supply during the holiday season.
Those devices are important for Best Buy as they sell in large numbers and act as a magnet for customers who often spend on other products.
“Getting hold of Apple’s latest iPhone or its new laptops is very challenging. These items should, in theory, be providing a nice lift to sales as the holidays approach, but stock levels remain low,” said Neil Saunders, managing director of research provider GlobalData.
The company had included easier access to “hardest-to-find” products as a perk in a $200-a-year membership program launched last month to navigate the shortage.
But costs related to the program, increased expenditure to expedite some shipments and earlier Black Friday deals were expected to take a toll on its margins in the fourth quarter.
Best Buy forecast current-quarter comparable sales between a fall of 2% and a rise of 1%, the midpoint of which was below estimates of a 0.1% rise, according to Refinitiv data.
Its shares fell the most in intraday trading since the pandemic-driven selloff in March 2020.
(Reporting by Uday Sampath in Bengaluru; Editing by Sriraj Kalluvila, Shounak Dasgupta and Aditya Soni)