What happened

Shares of Best Buy (BBY 1.42%) were falling last month as the coronavirus sell-off combined with an earnings report that was solid but not strong enough to overcome fears about an outbreak. According to data from S&P Global Market Intelligence, the stock finished the month down 11%.

As you can see from the chart below, the stock mostly tracked with the S&P 500 over the month but fell more sharply over the last week of February as coronavirus fears rocked the market and the fourth-quarter report came out at the end of February.

^SPX Chart

^SPX data by YCharts.

So what

Like other retailers, Best Buy is highly reliant on China for manufacturing, and the coronavirus outbreak that started there has provoked questions about supply chain disruptions across the retail industry. Traditional retailers like Best Buy have largely underperformed the market since the coronavirus-driven volatility began.

Two customers looking at phones in a Best Buy store.

Image source: Best Buy.

Best Buy stock fell 3.4% on Feb. 28 even as the electronics chain turned in a better-than-expected number in its fourth-quarter earnings report. Comparable sales in the quarter rose 3.2%, leading to overall revenue growth of 2.7% to $15.2 billion, which topped expectations at $15.05 billion. On the bottom line, the company also saw gains in the holiday quarter as adjusted EPS rose from $2.72 to $2.90, ahead of the analyst consensus at $2.75.

Despite those strong results, investors seemed nervous about comments on the coronavirus in the guidance. Management called the situation around the outbreak "very fluid" and said it was assuming that the majority of the impact would take place in the first half of the year. The company called for comparable sales growth of flat to 1% for the first quarter and revenue of $9.1 billion to $9.2 billion, below estimates at $9.23 billion. Guidance for the full year was also worse than Wall Street had expected.

Now what

Best Buy stock has continued to fall through March 9, again underperforming the S&P 500, and it's a sign that investors fear the retailer could be more seriously impacted by the widening coronavirus outbreak. Best Buy also raised its quarterly dividend from $0.50 to $0.55 after hours on Feb. 28, but that did little to restore investor confidence. If the company's guidance is correct, Best Buy seems like it's on solid footing, but an expanded outbreak in the U.S. and more general fears could keep consumers at home and cause them to delay the big-ticket purchases that Best Buy depends on, notwithstanding the effect of any supply chain disruptions from China.