Consumer electronics giant starts the year strong; to roll out home service

Demand for gaming and mobile products boosted Best Buy’s first-quarter comparable sales, as the retailer beat the Street on profit and sales.



Best Buy revenues rose 1% to $8.53 billion for the period ended April 29, 2017, beating analysts’ estimates of $8.28 billion, from $8.44 billion in the year-ago period. Net income fell to $188 million, or 60 cents a share, easily beating the Street and down from $229 million, or 70 cents per share a year earlier when it benefitted from some settlement proceeds.



The biggest surprise was the company’s unexpected sales gain. Comparable sales increased by 1.6% during the quarter, beating analysts’ predictions for a 1.5% decline.



“Our enterprise comparable sales … were driven by growth in both the domestic and international segments,” said Hubert Joly, Best Buy chairman and CEO. “On the profitability side, at the enterprise level, we continued to optimize merchandise margins and exercise good expense management. Our revenue was higher due to strong performance in gaming, a better-than-expected result in mobile, and the improvement of overall sales trends due to the arrival of delayed federal tax refund checks.”



Best Buy's domestic online revenue of $1.02 billion increased 22.5% on a comparable basis, primarily due to higher conversion rates and in-creased traffic. As a percentage of total domestic revenue, online revenue increased 230 basis points to 12.9% versus 10.6% last year.



“Despite the continued surge of Amazon, the most encouraging figure from today's results is that Best Buy is succeeding and growing share in the digital part of the market,” commented Neil Saunders, managing di-rector of GlobalData Retail. “This alone is a very helpful dynamic; but when put alongside the benefits that stores provide, we believe it gives best Buy an advantage it can maximize on over the rest of this year and beyond.”



On the chain's quarterly call with analysts, Joly said Best Buy will roll out an in-home advisors program it has been testing in several markets for about a year, the StarTribune reported. As part of the service, consultants make free home visits and advise consumers how to better equip their homes with the latest technology.



The company forecasts similar performance for the second quarter, predicting “enterprise comparable sales growth in the range of 1.5% to 2.5%, and non-GAAP diluted EPS in the range of $0.57 to $0.62,” according to Best Buy CFO Corie Barry.



Looking out to the rest of its fiscal year, which has one extra week compared to fiscal 2017, Best Buy expects enterprise revenue to be in the range of $8.6 billion to $8.7 billion, and is planning for a comparable sales change in the range of 1.5% to 2.5%. It also revised its expectations for revenue growth, which Best Buy now expects to grow by approximately 2.5%.