Best Buy reports strong Q2 as online sales jump 242%; sounds cautious note
Best Buy Co. reported strong second-quarter earnings and sales, fueled by its largest online sales gain to date and better-than-expected store sales.
The consumer electronics giant posted a 242% increase in online sales for the quarter ended Aug. 1. Total comparable sales rose 5.8% — the chain’s highest in two years — even though Best Buy stores were open by appointment only for the first six weeks of the quarter.
On the chain’s quarterly conference call, president and CEO Corie Barry told analysts that, starting next month, Best Buy will pilot a ship-from-store hub model to help handle significant volume pre-holiday and year-round.
“All our stores will still ship out online orders, but approximately 250 locations will be positioned to ship out significantly more volume,” Barry said.
The locations in the pilot were chosen for their space, proximity to carrier partners and ability to support same- and next-day delivery.
“Over time, this should allow us to deliver a more productive fulfillment model,” Barry added.
Best Buy is also continuing to add additional third-party physical pickup locations for online orders to provide more flexibility and convenience for customers. It now has more than 16,000, covering 85% of the population within five miles.
The retailer sounded a cautious note about the third quarter. Best Buy CFO Matt Bilunas said that while the company expects third quarter sales to be higher compared to last year, it is unlikely they will continue at the current quarter-to-date level of approximately 20% growth. Also, the company is planning for higher expenses as its stores are now fully reopened.
"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," stated Bilunas.
Best Buy’s second quarter net income totaled $432 million, or $1.65 per share, up from $238 million, or $0.89 per share, in the year-ago period. Adjusted EPS of $1.71 easily topped analysts’ estimates for $1.04.
Revenue rose to $9.91 billion, up from $9.54 billion last year and beating estimates of $9.73 billion. The biggest sellers for the quarter included computing items, tablets and appliances.
For the first three weeks of the third quarter, sales are up about 20%, with sales of large appliances and home theaters picking up now that stores are all once again open to consumers.
Best Buy has declared a dividend of $0.55 per share payable on Oct. 6 to shareholders of record as of Sept. 15.