Best Buy CFO: Coronavirus ‘Very Fluid Situation’ Impacting First Half-Year Results

Best Buy Feb. 27 said it expects interruptions from the global coronavirus outbreak to impact first half-year store results.

Like many retailers, Best Buy generates much of its product inventory from China, which, as the epicenter of the COVID-19 virus, has seen many manufacturing facilities shuttered over worker safety concerns.

“This is a very fluid situation, which makes it difficult to determine exact financial impacts from disruptions in supply chain,” CFO Matt Bilunas said in a statement.

The CFO said the retailer views the situation as a relatively short-term disruption that would not impact Best Buy’s long-term strategy and initiatives.

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“Our guidance ranges for both Q1 and the full-year 2021 [upwards of 2%] reflect our best estimates of the impacts at this time,” Bilunas said.

Separately, the nation’s largest CE retailer disclosed that fourth-quarter (ended Feb. 1) same-store entertainment sales in the United States fell nearly 22% to $1.1 billion compared to a 2.7% increase to $1.3 billion in the previous-year period.

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The entertainment segment includes DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software.

The nation’s largest consumer electronics retailer said entertainment represented 8% of $13.8 billion domestic revenue, down from 10% of $13.5 billion in Q4 of 2019.

Internationally, same-store entertainment sales dropped nearly 17% to $94 million from a 2.7% drop to $117 million during the previous-year period. Entertainment represented 7% of international revenue compared to 9% in 2019.

Overall, domestic revenue increased 2.6% versus last year. The increase was driven by comparable sales growth of 3.4%, partially offset by the loss of revenue from store closures in the past year.

The largest comparable sales growth drivers were headphones, computing, appliances, mobile phones and tablets. These drivers were partially offset by declines in the gaming category.

Domestic online revenue of $3.52 billion increased 18.7% on a comparable basis due to higher average order values, increased traffic and higher conversion rates. As a percentage of total domestic revenue, online revenue increased to 25.4% versus 21.9% last year.

Best Buy Q3 Entertainment Revenue Plummets

Best Buy can’t wait for the winter holiday retail season.

The nation’s largest consumer electronics retailer Nov. 26 said third-quarter (ended Nov. 2) domestic entertainment revenue dropped nearly 21% in same-store sales compared to a gain of 12.4% during the previous-year period. International entertainment sales fell 31% compared to a gain of 10.8% last year.

The entertainment segment includes DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software.

Entertainment represented 5%, or $448 million of domestic revenue, compared to 6%, or $525 million during the previous-year period.

International revenue represented 5%, or $40 million of same-store sales, compared to 7%, or $58.3 million last year.

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Domestic revenue increased to $8.96 billion, up 2.4%versus last year. The increase was driven by comparable sales growth of 2% and revenue from GreatCall, which was acquired in Q3 last year, partially offset by the loss of revenue from store closures in the past year.

The largest comparable sales growth drivers were appliances, headphones, tablets, services and computing. These drivers were partially offset by declines in the gaming and home theater categories.

“We are excited about our holiday plans,” CEO Corie Barry said in a statement. “Customers ordering online will get free next-day delivery on thousands of items all season long with no membership or minimum purchase required. They can also choose to pick up their products in a store within an hour of placing their order.”

Indeed, domestic online revenue increased 15% to $1.4 billion due to higher average order values. As a percentage of total domestic revenue, online revenue increased 15.6% versus 13.8% last year.

As the holidays loom, Best Buy is offering free next-day delivery on myriad items, excluding bigger and heavier items such as big-screen TVs and refrigerators.

With the service “Store Pickup,” customers can get their order ready within an hour at their local Best Buy. Best Buy reports 40% of online sales are picked up in stores.

Best Buy Widens Q1 Entertainment Sales Decline

Christmas is officially over. The post-winter holiday blues hit Best Buy entertainment sales with a thud.

The nation’s largest consumer electronics retail chain May 23 reported a 12.7% drop in same-store entertainment sales to $424 million for the quarter ended May 4. The business unit includes DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software.

Entertainment sales declined less than 1% to $504 million in the previous-year period.

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International entertainment sales dropped 14% to $33 million, compared to an 8.3% decline to $41.8 million in the previous-year period.

Overall, Best Buy upped domestic operating income 24.3% to $332 million from $267 million last year. Revenue upped less than 1% to $8.48 billion from $841 billion.

The largest comparable sales growth drivers were appliances, wearables and tablets.

Domestic ecommerce revenue of $1.31 billion increased 14.5% on a comparable basis primarily due to higher average order values and increased traffic. As a percentage of total domestic revenue, online revenue increased to 15.4% versus an increase to 13.6% last year.

On June 11, CEO Hubert Joly transitions to the newly created position of executive chairman. CFO and strategic transformation officer Corie Barry becomes Best Buy’s fifth CEO and first female chief executive.

Joly appears to relish the transition from day-to-day operations to cushy board oversight.

“I am very proud of the seamless transition we have decided to implement, as it reflects positively on our momentum as well as our focus on executive development and succession planning,” Joly said in a statement.

Best Buy Q4 Entertainment Sales Growth Cools, Profit Up

Best Buy Feb. 27 reported a 2.7% increase in fourth quarter (ended Feb. 2) entertainment comparable store sales, which was down from a 16.8% increase during the previous-year period.

The entertainment segment, which includes DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software, generated 10% ($1.34 billion) of Best Buy’s $13.4 billion in domestic revenue. That compared to $1.39 billion (10%) during the previous-year period.

Internationally, same-store entertainment sales dropped 2.5% compared to a 11% increase last year. Entertainment represented 9% ($117 million) of international revenue, compared to $123 million (9%) last year.

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Overall, the nation’s largest consumer electronics retailer reported $735 million in profit, which was up from $364 million in net income during the previous-year period. Revenue dipped less than 4% to $14.8 billion compared to $15.3 billion last year.

The company generated comparable sales growth across multiple categories, with the largest drivers being wearables, appliances, smart home and gaming. These drivers were partially offset by a decline in the mobile phone category.

Indeed, Best Buy closed 257 branded mobile and 12 large format stores in 2018.

“We are very proud of the financial results we have just delivered,” CEO Hubert Joly said in a statement. “For the fourth quarter, we reported a 3% increase in our comparable sales, on top of 9% comparable sales growth last year. For the full year, our comparable sales grew 4.8% and our [earnings per share] increased more than 20%.”

 

Best Buy Reports Softer Q2 Entertainment Sales Increase

Best Buy Aug. 28 reported 8.5% same-store entertainment sales increase in second quarter (ended Aug. 4) – down from 15.4% sales increase 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 7% ($604.7 million) of Best Buy’s domestic revenue in the quarter compared to 6% ($1.27 billion) last year.

Internationally, entertainment same-store sales increased 14.3%, generating $44.4 million (6%) of revenue. That compared to 0.5% increase and revenue of $33.4 million (5%) last year.

Best Buy’s legacy CE unit saw 6.8% increase in domestic same-store sales, up from 2.5% increase last year. Revenue remained relatively flat at $2.76 billion compared to $2.64 billion last year.

“Our comparable sales growth was helped by the favorable environment in which we operate and driven by how customers are responding to the unique and elevated experience we are building,” CEO Hubert Joly said in a statement. “We are particularly encouraged with the continued progress of our … continued market share gains. We are excited about the progress we are making on the implementation of our Best Buy 2020 strategy and the opportunities in front of us.”

 

 

Best Buy Delivers ‘Better-Than-Expected’ Q1 Results

In an age of e-commerce and Amazon, maintaining near positive year-over-year entertainment retail sales results can be a good thing.

That’s Best Buy’s mindset, which May 24 reported 0.8% decline in entertainment segment same-store sales for the first quarter, ended May 5.

Never mind the entertainment unit, which includes myriad products such as DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software, generated 11.3% increase in same-store sales during the previous-year period.

That’s because entertainment produced 7% ($589 million) of Best Buy’s $8.4 billion in domestic revenue, which was up from $554 million, or 7% of $7.9 billion in domestic revenue last year.

When combined with comparable sales upticks in consumer electronics (2.9%), computing and mobile phones (10.2%), appliances (13%) and services (7.3%), entertainment’s softness can be ignored.

“We are happy to report better-than-expected top- and bottom-line results for the first quarter,” CEO Hubert Joly said in a statement.“This strong performance was broad-based, with positive comparable sales across all channels, geographies and most of our product categories.”

Joly said top-line strength was the result of continued “healthy consumer confidence” and product innovation in multiple areas of technology.

“Customers are responding positively to the unique experience we provide to them online, in stores and in their homes,” he said.

International entertainment results are a different matter. Same-store entertainment sales dropped 8.3%, compared to a near 15% increase last year.

Entertainment represented 6% ($41.8 million) of Best Buy’s $697 million in foreign revenue, which was down from $43.1 million (7%) in last year’s $616 million in sales.