Best Buy in strong top- and bottom-line growth as online sales soar; to exit Mexico
Best Buy Co. reported third-quarter profit, revenue and same-store sales that were above expectations, but sounded a warning note about the holiday season.
"While the demand for the products and services we sell remains at elevated levels as we start the fourth quarter, it is very difficult for us to predict how sustainable these trends will be due to the significant uncertainty related to the various impacts of the pandemic," said CFO Matt Bilunas.
On Best Buy’s earnings call, Bilunas told analysts that the chain also expects higher supply chain costs from parcel surcharges.
Also on the call, company executives said Best Buy plans to close all its stores in Mexico, where it currently has some 41 locations. (According to reports, Best Buy closed eight stores in Mexico earlier this year.)
“During the quarter, we made the difficult decision to exit our operations in Mexico," Best Buy CEO Corie Barry told analysts.
Barry said the decision was part of a company business review that included areas where it could cut back.
"We viewed it as critical that the outcome of this analysis would ensure our focus and resources are closely aligned with the opportunities we see in front of us," Barry said.
The consumer electronics giant reported net income of $391 million, or $1.48 a share, for the quarter ended Oct. 31, compared to $293 million, or $1.10 a share, in the year-ago period. Adjusted earnings per share were $2.06, topping Street estimates of $1.71.
Revenue rose 21.4% to $11.85 billion, beating estimates of $11.00 billion.
Same-store sales rose 23%. U.S. comp online sales skyrocketed 173.7%, compared to 15.0% a year ago.
“Today, we are once again reporting strong quarterly results in the midst of unprecedented times,” said Barry in a statement. “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.”
Barry noted that the chain’s strong financial performance is allowing it “to share our success with the community, our shareholders, and, importantly, our employees.” Best Buy has raised it starting wage to $15 per hour, paid recognition bonuses to field employees and reinstated its short-term incentive compensation.
“We recently made a $40 million donation to the Best Buy Foundation to accelerate the progress towards our goal to reach 100 Teen Tech Centers across the U.S.,” Barry said. “In addition, we plan on resuming our share repurchase program during Q4 of this fiscal year.”