Best Buy reports strong Q2, ups outlook, hits e-commerce, omnichannel stride
Best Buy reported solid second quarter results and produced online sales growth of 31.2 percent on the strength of mobile.
The company reported second quarter earnings of 67 cents a share (69 cents a share non-GAAP) on revenue of $8.94 billion, up from $8.53 billion a year ago. Wall Street was expecting earnings of 63 cents a share on revenue of $8.66 billion.
Best Buy reported same store sales of 5.4 percent in the second quarter.
In addition, Best Buy upped its outlook. Best Buy projected fiscal third quarter revenue of $9.3 billion to $9.4 billion with same store sales growth of 4.5 percent to 5.5 percent. Non-GAAP earnings will be between 75 cents a share to 80 cents a share.
For fiscal 2018, Best Buy is projecting revenue growth of 4 percent with non-GAAP operating income growth of 2 percent to 6 percent.
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Add it up and Best Buy appears to be delivering on its omnichannel retail strategy and competing with the likes of Amazon. Best Buy has had to compete with rivals such as Amazon and Walmart for years. While most retailers have to answer the Amazon question today, Best Buy has been answering the bell longer than others.
Best Buy CEO Hubert Joly said the retailer is benefiting from product innovation as well as a more confident consumer. Best Buy in the US said it saw sales growth for computing, wearables, smart home, mobile phones, and appliances. Tablets saw weaker demand.
On a conference call with analysts, Joly said that Best Buy continues to invest in systems and technology to become more efficient. He also outlined progress on the company's Best Buy 2020 effort.
The first priority is to explore and pursue growth opportunities around maximizing the multichannel resell business and providing services and solutions that solve real customer needs and help -- and help us build deeper customer relationships. In support of maximizing the multichannel retail business, we continue to drive digital innovation to improve the customer experience. We are on pace to generate well over $5 billion in domestic online sales this fiscal year. Another exciting opportunity to maximize the multichannel retail businesses is our in home adviser program. Our In-Home Advisors are professional sales consultants with broad product knowledge. They provide free consultations and serve as the single point of contact for all technology needs across all vendors. In other words, they can help you design, including place for great entertainment system or to pick out your appliances for a kitchen remodel or help you stream music and content across your home without annoying buffering issues. After testing the program in several cities over the last 1.5 years, we are currently rolling it out nationally. By the end of September, we will be offering these free in-home consultations across all major U.S. cities nationwide.
The in-home advisor role means Best Buy is investing in training and hiring more people. The plan is to surround those people with technology systems to help in the field. Joly said:
At the highest level in investments we are talking about in people, so if you take In-Home Advisor, clearly, we are adding people. We're training these people. This is a compensation level that's higher and then we're equipping them with tools. So for example, one of the great tools that they are actually very excited about is the new CRM system, customer relationship management, system that we have invested in and that we'll continue to invest in.
Joly added that Best Buy will continue to enhance its smartphone experience in stores and demonstrate voice assistance technology in partnership with Google and Amazon.
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