Best Buy Shares Plunge After CEO Warns Record Growth Is Not 'New Normal'

Best Buy's earnings report beat Wall Street expectations, but after weeks of record-highs, the CEO also warned that the growth is "not a new normal." That sent Best Buy shares down by more than 10 percent, as investors weighed whether the electronics retailer can compete with Amazon, Walmart and others.

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Best Buy had a roller coaster of a day today. The company is essentially the last standing big box electronics store competing against companies like Amazon and Walmart. Yet in recent weeks, Best Buy's shares have been at all-time highs - that is, until today. NPR's Alina Selyukh explains.

ALINA SELYUKH, BYLINE: For Best Buy, the day started on a very high note.

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UNIDENTIFIED MAN #1: Hi. Good morning. Congratulations on a very nice quarter.

UNIDENTIFIED MAN #2: Congratulations on a great quarter.

SELYUKH: These are Wall Street analysts talking to Best Buy's executives on its earnings call. Best Buy's results were impressive, sales and earnings stronger than even the most optimistic forecasts. In fact, the electronics store has been beating Wall Street's expectations for a while now. Last week, its shares were the highest they've ever been.

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HUBERT JOLY: This higher-than-expected gross was driven by stronger consumer demand for technology products and by the strong execution of our strategy.

SELYUKH: That's CEO Hubert Joly. He says the company is counting on people spending more on technology in their homes. But then he said the words many people were thinking but did not want to hear - that the growth is, quote, "not the new normal." Best Buy's shares fell more than 11 percent. Here's how Brandon Fletcher saw it.

BRANDON FLETCHER: Is the company really worth more than it ever was in the era of the '90s?

SELYUKH: Fletcher is a retail analyst at the brokerage firm Sanford Bernstein.

FLETCHER: Is it worth a record-high stock price when you know their disruption is likely to continue from Amazon and Walmart - probably not.

SELYUKH: Retail watchers are mixed on Best Buy's resilience. The company has been ramping up its online presence, improving customer support, closing underperforming stores. But its rivals are not just competing on price, but also creating their own versions of Best Buy's well-known Geek Squad. And Fletcher says Amazon has been stealing the most profitable business - those boring accessories like HDMI cables.

FLETCHER: There's a generational difference, right? So you still have baby boomers who will go to a Best Buy to essentially ask basic questions on connectivity. So you might still sell them an HDMI cable. But much of that assortment that we used to go to Best Buy for, that's what's getting eaten by Amazon.

SELYUKH: Walmart, too, is cutting in with cheap, urgently needed stuff like printer ink. Fletcher says Best Buy still has some advantages. It is the place where many people go to check out the latest phone or newest TV. And Best Buy has managed to beat expectations in the face of all this ramped-up competition. What's far from clear is just how long that will last. Alina Selyukh, NPR News.

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