Please ensure Javascript is enabled for purposes of website accessibility

Why Best Buy Stock Lost 30% in March

By Demitri Kalogeropoulos – Apr 6, 2020 at 10:20AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A pause in retailing has investors worried about sharp sales declines.

What happened

Best Buy (BBY 5.86%) stock underperformed the market last month. Shares fell 30% compared to a 12.5% drop in the S&P 500, according to data provided by S&P Global Market Intelligence.

That slump added to significant declines so far in 2020, with the stock down 37% though early April.

A man and a woman shop for appliances.

Image source: Getty Images.

So what

Its position as a consumer-facing retailing business didn't help Best Buy during the aggressive social-distancing efforts that swept through Europe and North America last month. Investors fled most stocks in the industry on fears of a dramatic sales decline in the wake of COVID-19's spread. In fact, Best Buy effectively closed its stores to shoppers, choosing to move to a pickup-only selling model for the time being.

Now what

CEO Corie Barry and her team said on March 21 that sales were running "ahead of plan" through mid-March. But the shift in operating posture still convinced management to withdraw its fiscal year guidance while moving to preserve capital, including by fully drawing down its $1.25 billion revolving credit line.

That initiative gives the retailer plenty of flexibility to weather any temporary growth slowdown. But it isn't yet clear exactly how deep that economic slump will be, or when Best Buy will reopen its stores.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Best Buy Co., Inc. Stock Quote
Best Buy Co., Inc.
BBY
$67.40 (5.86%) $3.73

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
331%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.