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.
Post-COVID-19 telework will spur a 22% decline in “office-based working environments,” reported Strategy Analytics Wednesday. It predicts people working from home long term could increase by up to 300% from pre-pandemic levels. That shift “would have major implications for transport and other sectors, with billions of commuting journeys eliminated every year,” said SA. It canvassed 9,000 people online in the U.S., Germany and U.K., March-May, and classified employees into: (1) “City escapees” are 24% of employees and want to work from home forever; (2) “Family jugglers” are 30%, “less keen” on telework; (3) “Struggling commuters,” 37%, in lower-income brackets and unlikely to work from home; (4) “Teleworking lifers,” 9%. “Many employers are reviewing their WFH policies but the research makes it clear that a significant proportion of employees, particularly those previously based in offices, would be happy to continue working from home permanently,” said SA.
Though Texas Instruments Q2 revenue of $3.2 billion was down 12% from a year earlier, it wasn't "the depth of the decline we saw in the 2008 financial crisis,” said Dave Pahl, head of investor relations, on a Tuesday evening earnings call. “We remain cautious on how the economy might behave over the next few years.” The main “weakness” was in automotive, down about 40% sequentially and from a year earlier, he said. “Excluding automotive, TI was up 8% sequentially and down 3% versus a year ago. The automotive market appears to have bottomed in May as North American and European assembly plants resumed operations.” TI’s personal electronics business was up more than 20% from Q1 and about 10% higher than the 2019 quarter, he said. “This can best be explained by work-from-home trends and TI being in a position to support unforecasted demand in the quarter.” Short lead times and high availability “are important capabilities that allow us to continue to support customers' near-term and unforecasted demand,” said Chief Financial Officer Rafael Lizardi. “Our product portfolio of mostly long-lived parts affords us to have a steady hand and therefore, we will take a similar approach to our factory operating plan again in third quarter.”
COVID-19 uncertainties caused a “sharp decline” in global flat-panel TV shipments in Q1, reported ABI Research Wednesday. It forecasts 222 million unit shipments in 2020, down 3% from 2019. Stay-at-home orders and the pandemic's “economic upheaval” are bringing lower consumer spending on more discretionary consumer tech gear, it said. Conditions are likely to speed a decline in TV prices, said analyst Khin Sandi Lynn. Video streaming services’ popularity during lockdown caused a 4 million unit bump in streaming media adapter shipments year on year, said the analyst. Streaming media device and service growth is expected to continue beyond the pandemic. ABI expects the global flat-panel TV market to rebound in 2021, growing at a 4.3 compound annual growth rate to 275 million units in 2025.
Best Buy’s Q2 quarter-to-date sales were up 2.5% through Saturday, including 2% in the U.S., said the retailer Tuesday. Sales are up about 15% from last year since stores started reopening mid-June, it said. Best Buy is raising hourly pay 4%, effective Aug. 2, it said: “After the 4% hourly pay increase, employees who are not yet at $15 per hour will have their pay increased to the $15 per hour starting wage.” The stock rose 4.1% to $94 at 5:13 p.m. EDT.
Some 17% of cord-cutter households said they will return to pay TV when live sports return, reported Roku Tuesday. Thirty-one percent said they are likely to subscribe to a live sports streaming service, and 52% of traditional and cord-shaver households that cut back on pay-TV service say they are likely to reduce their package if televised live sports on traditional pay TV doesn’t return. The Macro Consulting survey commissioned by Roku canvassed 7,000 adult U.S. viewers in March and another 2,000 in May amid COVID-19. Nearly a third of U.S. TV households don’t have cable, satellite or telco TV; 25% were cord shavers. Forty-five percent of cord shavers intended to sever service in the next six months. Cutting home entertainment expenses was the leading reason for cord-cutter households shifting to full-time streaming, with Roku users who cut the cord saying they saved about $75 monthly. Nearly half of all U.S. TV households say they are watching more free, ad-supported TV. Four in 10 cord-cutter households said access to free trials and extended free trials to premium subscription services influenced their decision to cut traditional pay-TV service.
COVID-19 lockdowns sent Q2 sales in the Philips consumer products “portfolio” plunging 19%, with all personal health businesses declining by double digits, said Chief Financial Officer Abhijit Bhattacharya on a Monday investor call. Consumer sales through digital online channels grew by mid-single digits in the quarter to about 46% of total sales for the personal health businesses, compared with 33% in Q1, he said. In-store consumer sales declined by “strong double digits” in Q2, he said. “We have witnessed gradual improvement of consumer demand in the course of the second quarter, with a comparable sales decline of 11% for the personal health businesses in the month of June, he said. “We currently expect consumer demand to sequentially improve in Q3 and personal health comparable sales to be back to modest growth in the fourth quarter.”
An “emerging risk” survey found the “renewed” spikes in COVID-19 cases in many regions was a top executive concern as Q2 drew to a close, reported Gartner Friday. It canvassed 131 senior executives “across industries and geographies on the top concerns facing their businesses,” it said. Most cited the pandemic’s “second wave” as their top worry, “even as many regions are struggling with the first wave of the virus,” said Gartner. “Concerns related to the financial implications of the pandemic were present throughout the top 10, with executives in particular expressing concerns about their organizations’ new working conditions and strategic responses to the crisis.” Senior executives are “grappling” with their companies’ reopening plans, “complicated by different stages of the coronavirus in different regions,” said Gartner. “It’s now becoming clear that a ‘re-exit plan’ will also be a required part of any such strategy.”
COVID-19 brought “the biggest workforce shift and reallocation of skills since World War II,” said ManpowerGroup CEO Jonas Prising on a Q2 investor call Monday. There’s evidence “this crisis is accelerating the technical and soft skills transformations that we have been tracking and predicting for some time,” said Prising. “Acute skills shortages” in tech, cybersecurity, software development and data analysts for “continue unabated,” he said. The need for a “skills revolution is here in force,” he said.
The auto industry “slump,” triggered by the shutdown of car plants and dealerships from the COVID-19 pandemic “is the worst seen in our history,” said Autoliv CEO Mikael Bratt on a Q2 investor call Friday. The company supplies vehicle safety systems to major car manufacturers in 27 countries. April vehicle production came to a virtual standstill in Europe and North America, said Bratt. That “coupled with the volatile restart” and ramp-up in May and June “had a drastic effect on our profitability despite forceful cost reductions,” including 25% personnel cost savings through layoffs and furloughs, he said. Autoliv swung to a $171 million Q2 operating loss from a year-earlier $183 million profit. “It is essential to balance the cost reduction response against the need for capacity to manage the recovery that has started,” said Bratt. North American vehicle production “resumed in mid-May, about two weeks later than in Europe,” he said. “However, the ramp-up has been faster and less volatile.”