Richfield-based Best Buy reports gift card sales are surging this holiday season, a surge that helped boost third-quarter profits for Best Buy to $227 million, handily beating Wall Street expectations.
Best Buy said demand for gift cards plummeted last year because of bankruptcies and turmoil among many retailers and financial institutions. But Best Buy CEO Brian Dunn said gift cards are back in favor with shoppers.
Dunn said gift card sales were up about 40 percent in November and doubled the Friday and Saturday after Thanksgiving. He said when customers redeem gift cards they tend to spend freely.
"Our customers historically spend over two times the value of a gift card when they come back to redeem it, a fact that has contributed meaningfully to our post Christmas business in recent years," Dunn said.
Wall Street was unhappy, though, to hear Best Buy forecast profits for the current quarter will be depressed by increasing competition and falling prices on flat-panel TVs and laptop computers. Best Buy shares fell about 8 percent on Tuesday.