What’s Going On Here?Best Buy reported better-than-expected earnings on Tuesday, but the US consumer electronics retailer opted not to give an outlook for the holiday season at all. What Does This Mean?It almost goes without saying that yet another company’s ecommerce business benefited from homebound customers last quarter, but Best Buy probably wouldn’t want us to stop now: its online sales climbed 174% compared to the same time last year. The retailer’s success wasn’t limited to the online world either, with sales in stores that have been open for a year or more growing by a better-than-expected 23%.
And then everything went wrong: Best Buy admitted it’s facing a season of fewer products, higher shipping costs, and lower profits from video game consoles – this year’s hottest gift. So while it wouldn’t give an official outlook for next quarter, it did say it wasn’t expecting last quarter’s sales trends to keep going. Why Should I Care?Zooming in: The emperor’s new sweatpants.
America’s retailers have been in two camps this year. On the one hand, you have the Best Buys and the Walmarts, which have flourished by selling necessities and boredom-killers at affordable prices. And on the other, you have struggling clothing outlets and department stores like Macy’s, which are just trying – and failing – to convince sweats-wearers everywhere to upgrade their closets.
The bigger picture: That’s a wrap.
With US retail sales missing expectations in October, investors are looking for signs of how retailers will hold up in the last few weeks of 2020. And they won’t have to look far: the National Retail Federation is expecting holiday sales to grow by between 3.6% and 5.2% on the same time last year – compared to the last five years’ 3.5% average. This year, after all, gift-buyers are likely to spend more money on “wrappables” – a word we just made up – than on experiences, workshops, and sports tickets. | 