Best Buy Says Trendy Real Estate Market Is Driving Demand for TVs and Home Consultations

As Americans move into new homes, remodel homes, and watch home values ​​rise, Best Buy CEO Corie Barry said they are buying appliances and big-screen TVs and hiring the company to install new technology. .

The strong housing market is one of the key reasons the consumer electronics retailer beat analysts’ expectations for first-quarter fiscal earnings, according to Barry. He said stimulus controls also boosted spending on home theaters, appliances and computers.

“Even with the high demand we have seen during the pandemic, we believe that the nesting phenomenon will continue to drive demand for products and services that help customers improve their home experience,” he said in an earnings call.

Home prices have been on the rise for months as the supply of homes falls to near-record lows and interested buyers bid competitively. In March, home prices posted the largest increase in more than 15 years, according to the S&P CoreLogic Case-Shiller national home price index. The pandemic has intensified those trends by pushing some consumers to move from dense cities to suburban or rural areas where they may have larger yards or a home office.

That has fueled demand from several pandemic beneficiaries, including Home Depot and Lowe’s. Other retailers have also stepped up their investments in household items. For example, Walmart has partnered with Gap to launch an exclusive brand of bedding, bath, and other home accessories.

For Best Buy, the trendy real estate market is a boon that has spread to services and merchandise, Barry said. She said it has been a sales engine, particularly as people move into new homes. Sales online and in stores open for at least 14 months grew 37.2% compared to the prior year period.

“If you think of a moving experience right now, it’s not just that you want new appliances, you want all of your connected devices to work for you in a new environment,” he said in a call with reporters. “And that may look like new TVs. It may seem like a new home theater setup. It may seem like a new office setup now, to many of us, or a new home learning setup. ”

He said Best Buy has a “unique advantage” in selling products and offering services such as home installations or technical consultations.

“We all know that there is nothing more frustrating than when you move and your wireless network does not work the first day, especially in the life we ​​are living,” he said.

The company has seen new customers with a younger trend, and millennials have become Best Buy’s largest cohort of customers in the past 12 months, Barry said. Millennials, who are between the ages of 25 and 40, as defined by the Pew Research Center, have also been the generation that is driving home sales as they marry, adopt pets and have children.

Real estate trends could help Best Buy as it faces tough comparisons in the coming quarters. It had particularly high sales of technology during the pandemic, such as laptops and computer monitors, as more people worked, cooked and attended school at home.

Some analysts have warned that the pandemic may have pushed purchases forward, which could dampen demand. For example, Wedbush analysts downgraded the company’s stock in late April to neutral, saying home improvement and home furnishings retailers will outperform Best Buy this year. The stock research firm lowered Best Buy’s price target to $ 125, about 5% higher than where the stock is currently trading.

The retailer raised its forecast for the first half of the year, citing “extraordinarily high” demand in the first quarter that has continued into the second. However, CFO Matt Bilunas acknowledged the uncertainty in the second half of the year in an earnings call Thursday. He said consumers can spend less on consumer electronics as they spend more on eating out or taking vacations.

Add Comment