David Paul Morris, Bloomberg via Getty Images
What you need to know
- Best Buy's laptop-computer sales increased 7% year-over-year for the company's latest quarter as people replaced older equipment.
- But shoppers at Best Buy have cut back on buying home theater equipment and other more discretionary items, the retailer's executives said.
- Best Buy’s Chief Executive Corie Barry says that price reductions have boosted demand, but not by much.
Best Buy is seeing a surge in laptop sales, while home theatre equipment and other electronics are on the decline.
Best Buy executives reported on a Tuesday earnings call that consumers looking to upgrade their technology were driving the company’s laptop sales up 7% over last year. Corie Bardy, the CEO, stated that large-ticket items are no longer in high demand. And price reductions can only go so far to increase demand. According to a transcription provided by AlphaSense
Williams-Sonoma and Target both reported decreased sales of big-ticket furniture. Lowe’s Cos., Inc. (LOW), also reports fewer projects for renovations.
Best Buy reported that its comparable sales dropped 2.9% over the past year, while both domestic and foreign revenue also declined. Stocks of the retailer dropped by more than 5 percent on Tuesday, after it failed to meet Wall Street expectations.
Computer, Tablet Upgrades Help Best Buy
Best Buy has remained resilient in the face of a challenging market. Computer and tablet sales have remained strong. Jason Bonfig, the Chief Merchandising officer at Best Buy said, that these sales were partly driven, however, by outdated equipment, and less so, excitement for new gadgets.
“Right now we do think the biggest thing that's driving [it] is really that upgrade and replacement,” Bonfig told the Earnings Call. “That will probably continue into next year as we think about the end-of-life support of Windows 10 that happens in October of 2025.”
Barry explained that the decline in sales of other categories more discretionary offset the growth seen with laptops. Best Buy cut prices on TVs and appliances to bolster its market share, she said, which helped with demand—but only so much.
“It can be very hard to stimulate demand because the customer … regardless of price point, just is not as interested,” She said
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