Best Buy Q3 Propelled By U.S. Comp Growth

For the third quarter ended November 3, when comparable sales in the U.S. increased 4.3%, Best Buy posted net earnings of $277 million, or 99 cents per diluted share, versus $239 million, or 78 cents per diluted share, in the year-before period.

Adjusted diluted earnings per share were 93 cents versus 78 cents in the year-previous quarter. Best Buy topped a MarketBeat-published analyst consensus estimate of 85 cents per adjusted diluted share.

Revenue was $9.59 billion versus $9.32 billion in the year-prior quarter. Operating income was $322 million down from $350 million in the year-earlier period. Adjusted operating income in the quarter slipped more slightly to $340 million from $348 million year over year. Supply chain costs and investments, including labor-related expenses, hit operating income, Best Buy noted.

Domestic revenue advanced 3.1% to $8.76 billion as compared with the quarter a year before, driven by the comp growth of 4.3% and partially offset by the loss of revenue from 287 Best Buy Mobile and 19 large-format stores the company closed over the past year. The comparable sales growth of 4.3% included a 70-basis point negative effect associated with an extra week in the 2018 fiscal year.

As for merchandising, comparable sales gained across multiple categories, Best Buy asserted, with the largest drivers being mobile phones, gaming, appliances, wearables, headphones and smart home.

Domestic online revenue of $1.21 billion advanced 12.6% on a comparable basis, primarily due to higher conversion rates and increased traffic. As a proportion of total revenue in the U.S. operation, digital revenue increased 110 basis points to 13.8%.

“Our team just delivered another strong quarter with 4.3% comparable sales growth and better-than-expected earnings growth,” said Hubert Joly, Best Buy chairman and CEO. “Similar to the first half of the year, our topline performance was helped by a favorable environment and driven by how customers are responding to the unique and elevated experience we are building. We have continued to make significant progress against our Best Buy 2020: Building the New Blue strategy, including expanding our In-Home Advisor program, growing our Total Tech Support members and completing the acquisition of GreatCall, a leading connected health services provider for aging consumers. We are energized by our continued momentum and overall performance and see significant value-generation opportunity ahead of us by successfully enriching lives with technology and providing services and solutions that solve real customer needs.”

Joly pointed out that the holiday season is arriving, “and our team has put together a best-in-class assortment, prepared an amazing set of deals and ensured we have great inventory availability across all the product categories we carry. In addition, we have continued to enhance our digital shopping experience and further improved our shipping speed, allowing us to delight customers with fast and free delivery.”