By Nicole Norfleet
The (Minneapolis) Star Tribune
Best Buy’s comparable sales grew 22.6% in August, September and October as shoppers continued to invest in technology at home during the coronavirus pandemic.
The year-over-year sales and earnings growth beat Wall Street expectations for the electronics retailer’s third quarter.
Online comparable sales for the quarter grew 174% to $3.82 billion, only trailing last quarter’s record growth in online sales, the company reported Tuesday.
“Today, we are once again reporting strong quarterly results in the midst of unprecedented times,” said Corie Barry, Best Buy’s chief executive, in a statement.
Best Buy leveraged the flexibility it has built into its supply chain and stores “to meet what is clearly elevated demand for products that help customers work, learn, cook, entertain and connect in their homes,” Barry said.
Best Buy reported earned $391 million, up more than 33% from last year. Overall revenue grew 21% to $11.9 billion.
“There is now no doubt that Best Buy will exit this year with a much stronger balance sheet,” said Neil Saunders, managing director of data analytics for consulting company GlobalData.
“What the Best Buy results also show is that rather than turning off the spending taps in the third quarter, it was full steam ahead for the American consumer. In our view, Best Buy is something of a bellwether for wider economic sentiment as the higher-priced, discretionary items it sells require both confidence and reasonable finances to buy. Based on the numbers, a lot of shoppers clearly felt financially able to splash out.”
Sales during the quarter were bolstered by “Black Friday” deals Best Buy offered in October at the same as Amazon’s Prime Day and other early holiday sales the retailer offered this season.
Like many other major retailers, Best Buy stores will be closed on Thanksgiving, but it will open early at 5 a.m. on Black Friday.
This holiday, the retailer has added a digital queue so customers who need help can wait in their cars or in less crowded areas to wait to be helped.
During the quarter, Best Buy experimented with a new test of hub stores where about 250 stores were turned into hubs to ship out significantly more online orders than normal stores.
Best Buy will add about 90 more hub stores to its pilot this holiday season, Barry said, during an earnings call.
The electronics retailer also is experimenting with remodeling four Twin Cities stores to reduce shoppable square footage as it focuses on improving fulfillment by providing more space to support in-store pickup and ship-from-store orders.
The biggest sales growth during the quarter came from computing, home theater and appliances following similar trends earlier in the pandemic. However, Best Buy experienced a decline in cellphone sales.