Best Buy Hits 52-Week High on Positive Q2 Report; 'Recession' Looms, Warns Analyst

Best Buy’s announcement Tuesday of a 2.5% sales increase for Q2 through Saturday (see 2007210062) showed the retailer’s “agility and tenacity” during a “difficult environment,” Wedbush analyst Michael Pachter wrote investors Wednesday. Shares reached a 52-week high Wednesday, closing 7.8% higher at $97.36. Best Buy likely benefited from the temporary or permanent shuttering of smaller brick-and-mortar competitors during the pandemic, but stimulus benefits for those receiving unemployment will soon end, “and a recession is likely to follow,” said Pachter. Best Buy said Tuesday online sales were up 255% quarter-to-date, and sales increased 15% since stores began reopening June 15. That showed customers "are gaining comfort with online purchasing while remaining loyal to the store,” it said. Temporary incremental unemployment benefits boosted Q2 sales, plus persistently strong connectivity products needed for remote work and school. Growth in computing and tablets is likely to continue as people continue to work from home and students prepare to do more schoolwork from home starting in the fall, Pachter said: “Aa looming recession and high unemployment rates could significantly impact Best Buy’s sales, as finances for Best Buy’s core consumer come under increasing pressure by October.” Best Buy's Q2 ends Aug. 1. It reports Aug. 26.