Best Buy posts surprise Q2 earnings beat driven by strong online sales

Best Buy said domestic online sales grew nearly 24 percent year over year. That growth also marks a 75-percent increase in online revenue over the last three years.

Best Buy said domestic online sales accounted for 10.6 percent of total revenue from the country.


In a time of digital uncertainty among most traditional retailers, consumer electronics chain Best Buy has managed to buck the trend and post huge gains in its online business.

As part of its second quarter financial results, Best Buy said domestic online sales grew nearly 24 percent year over year. That growth also marks a 75-percent increase in online revenue over the last three years.

For a company once considered obsolete, that's a really big deal.

"We saw continued positive momentum in our online sales -- delivering a second straight quarter of nearly 24 percent growth," said Chairman and CEO Hubert Joly. "We also continued to deliver cost savings and drive efficiencies in the business."

The retailer also saw strong demand for appliances and consumer electronics, which led to a rise in comparable-stores sales.

As for the rest of the numbers, Best Buy posted a Q2 net income of $198 million, or 61 cents per share, up from $164 million, or 46 cents per share, a year earlier.

Total revenue ticked up slightly to $8.53 billion with earnings of 57 cents per share.

Wall Street was expecting revenue of $8.40 billion and on earnings of just 43 cents per share. Best Buy's shares climbed nearly 18 percent in early trading Tuesday.

Looking ahead, Best buy expects Q3 revenue in the range of $8.8 billion to $8.9 billion on earnings of 43 cents to 47 cents per share. Analysts are expecting revenue of $8.77 billion and earnings of at least 45 cents per share.

"We continue to expect the slight revenue decline in the first half to be offset by slight growth in the back half," said Best Buy CFO Corie Barry in prepared remarks.

On a conference call with analysts, Best Buy said domestic online sales accounted for 10.6 percent of total revenue from the country, an increase of 2 percent from a year ago.

"We are encouraged by our execution and the momentum in our business," Joly said.

Best Buy's relative success over the last few years stands in stark contrast to most big-box and department store retail retail brands. For instance, cheap-chic retail chain Target's digital sales slowed, increasing just 16 percent during the quarter compared to a 30-percent gain the year prior.

Just yesterday, Target CIO Mike McNamara said the company is focused on improving its website and bolstering offline-online services like order pickup. Target will also invest in store replenishment and merchandising systems.

McNamara said Target has hired about 700 engineers since he joined as CIO in February 2015.

Over at Walmart, the ecommerce story has been similarly unpredictable. In its most recent earnings report, Walmart said online sales increased 11.8 percent primarily due to the continued rollout of its online grocery option and growth of pick-up in stores and clubs.

The growth marked the first time in nine quarters that the retailer's online sales increased quarter over quarter.