Need to Know
- Revenue for the retailer hit $11.85 billion, up from $9.76 billion a year earlier.
- Online sales were $3.82 billion in Q3, a jump of 174%, marking Best Buy’s second-best quarter for online revenue.
- The company outpaced industry forecasts in all categories but declined to provide a forecast for Q4.
Best Buy blew past industry forecasts with its Q3 earnings on November 24, posting higher-than-anticipated revenue as online sales continued to surge.
Digital sales for Best Buy in Q3 hit $3.62 billion, a year-over-year increase of 174%. This marked the second-best-ever quarter for online revenue; it’s best-ever quarter also took place this year, in Q2, when the company reported a 242% year-over-year gain.
“The current environment has underscored our purpose to enrich lives through technology, and the capabilities we are flexing and strengthening now will benefit us going forward as we execute our strategy,” Best Buy CEO Corie Barry said in a press release announcing the company’s Q3 earnings. Barry added on the company’s earnings call that “Our current way of life in our homes reliant on technology has only reinforced our belief in our strategic direction and purpose.”
Indeed, Best Buy has benefited from work- and study-from-home measures that have driven consumers towards purchases for the home, specifically home technology, and away from travel and dining out. The company’s revenue hit $11.85 billion over Q3, up from $9.75 billion the year before and ahead of the $11 billion expected by analysts. Same-store sales growth was 23%, ahead of analyst projections of 13.6%. Net income, meanwhile, hit $391 million up from $293 million this time last year.
On the earnings call, Barry said that Best Buy is working to invest in innovations and solutions that will help the company continue to serve a customer base that has pivoted towards e-commerce in the wake of COVID-19. Four stores in total have been renovated to test new, digital-first models, including improved curbside pickup and the availability of self-service lockers where online orders can be retrieved.
The company has also added a “digital queue” for customers who need employee assistance, so they can practice social distancing while they wait, and has improved its digital-consulting infrastructure, as more customers seek support from home. In October, the company announced a partnership with Accenture, which will focus on three areas of improvement: building and growing diverse talent; investing in growth and learning; and investing in new tech.
“We have been examining our business model from top to bottom, to determine where we may be able to accelerate our strategic efforts,” Barry said. “It is too early to know exactly how much of our sales and customer shopping activity will be via digital channels over time. But as a result of the pandemic, we expect it will be higher than it has been historically.”