Best Buy Q3 strong ahead of holiday shopping season
Best Buy's fiscal third quarter was better than expected as the company raised its outlook and said it was optimistic about the holiday selling season.
The company reported third quarter non-GAAP earnings of $1.13 a share, a dime better than estimates, on revenue on $9.76 billion. Wall Street was looking for sales of $9.7 billion. Best Buy reported GAAP third quarter earnings of $1.10 a share.
Same store sales were up 1.7%. Online revenue was 15.6% of total sales.
Best Buy CEO Corie Barry said the company is executing on its strategy and "excited about our holiday plans." Barry said Best Buy's inventory is strong and touted pick-up in store availability as well as next-day shipping.
Barry said on a conference call that Best Buy was launching new services and delivery options in its US markets. Advisor services for homes is a key area that should become more efficient with help of Best Buy's CRM system. She said:
We added 100 In-Home Advisors to end the quarter with approximately 720 advisers. As we shared at our investor update, 95% of those polled said they would continue working with their in-home adviser. And we continue to see higher spend at a higher gross profit rate from our in-home adviser customers versus other customers. We expect our advisers will become more and more productive as we advance our CRM system and enhance our digital tools.
Barry also added that digital marketing is starting to show benefits for Best Buy.
During Q3, we sunseted the rigid digital weekly ad technology platform and launched a top deals section in our app and on our website. This leverages cost and gives us more flexibility to introduce multiple promotional cycles within the week and ensure we are featuring our best offers.
By product category, Best Buy saw strong demand in appliances and services with consumer electronics flat. Computing and mobile phones had comparable sales growth of 3% in the quarter. Barry said that tablet demand was strong.
However, entertainment sales were down 20.8% from a year ago.
As for the outlook, Best Buy raised fiscal 2020 guidance to non-GAAP earnings of $5.81 a share to $5.91 a share with revenue of $43.2 billion to $42.6 billion.
For the fourth quarter, Best Buy is projecting revenue of $14.75 billion to $15.15 billion with non-GAAP earnings of $2.65 a share to $2.75 a share.