August 25, 2020
Best Buy Aug. 25 reported a 4.4% drop in second-quarter (ended Aug. 1) domestic same-store entertainment revenue, which was an improvement from a decline of 13.7% in the previous-year period.
The entertainment segment, which includes myriad products such as DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software, generated 5% of domestic revenue, or $456 million. The segment generated 5% ($441 million) in the previous-year period.
Internationally, same-store entertainment sales ballooned 44.5%, compared with a 20.1% decline in the previous-year period. The segment generated $13 million in sales compared to $14.3 million in the period a year ago.
Notably, the nation’s largest consumer electronics brick-and-mortar retailer saw domestic CE sales drop 3.8% compared to a 1% increase a year ago. CE represented 29%, or $2.65 billion, of domestic revenue, compared with 32%, or $2.82 billion in the previous-year period.
Outside the U.S., consumer electronics same-store sales dropped 4.7%, compared with a gain of 1% last year. CE revenue represented 27%, or $211.4 million of sales, down from 32%, or $229 million, a year ago.
As expected, online sales skyrocketed 242% to $4.85 billion on a comparable basis primarily due to increased traffic. As a percentage of total domestic revenue, online revenue increased to about 53.1% versus 16.1% last year.
The company plans increase shipments of online orders from local stores, with about 250 locations positioned to ship out higher volumes of product.
“Clearly, we are still operating in a dynamic environment [due to the coronavirus pandemic], and much uncertainty remains,” CEO Corie Barry said in a statement.
Barry said trends across most categories and services improved materially throughout the quarter as Best Buy re-opened more stores.
“The pandemic has accelerated the evolution of retail and compelled us to change our operating model in the best interest of our customers and employees,” Barry said. “It has allowed us to expedite some planned strategic changes that will set us up to emerge from this time even stronger.”
Indeed, domestic revenue of $9.13 billion increased 3.5%, versus $8.8 billion last year. The increase was primarily driven by comparable sales growth of 5% (1.9% increase last year), which was partially offset by the loss of revenue from 25 permanent store closures in the past year.
The largest comparable sales growth drivers were computing, appliances and tablets. These growth drivers were partially offset by declines in mobile phones, digital imaging and services.
That said, CFO Matt Bilunas warned that current Q3 sales would not continue at the current quarter-to-date level of approximately 20% growth.
“Overall, as we plan for the back half of the year, we continue to weigh many factors including potential future government stimulus actions, the current shift in personal consumption expenditures from areas like travel and dining out, the possible depth and duration of the pandemic, the risk of higher unemployment over time, and the availability of inventory to match customer demand,” Bilunas said.
That disclosure sent Best Buy shares down 4% in early morning trading.