Best Buy has plenty of reason for cheer this holiday season.
The retailer reported third quarter 2020 earnings and revenue that beat analysts’ expectations, it raised its earnings guidance, and shares of Best Buy are up more than 11% in the past three months. It also saw “strong traffic” over the Black Friday weekend, Bloomberg reported.
Best Buy said revenue grew to $9.76 billion from $9.59 billion last year, and sales at stores open at least 12 months rose 1.7%.
“Our teams continued to execute well and navigate ever increasing customer expectations, a consistently competitive retail environment, and the uncertain tariff situation,” said Best Buy CEO Corie Barry, who took over for Hubert Joly in April, in a recent earnings call.
The retailer is entering the second chapter of Building the New Blue, as Barry doubles down on its existing strategies set into place by Joly in 2018.
“In the near term, we are excited about our holiday plans," said Barry in a press release. "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.”
Heading into the holidays, Best Buy launched 175 alternate pickup locations in the New York City area at CVS and UPS stores, where either store locations are not convenient or ship-to-home is not desired. Starting in New York, Best Buy is also rolling out same-day delivery. Online shoppers can select a three-hour delivery window for same-day delivery. The retailer is also beginning to roll out curbside pickup at stores in the New York market, where a Best Buy employee will bring the product directly to the customer’s car.
FY20 Financial Guidance
- Enterprise revenue of $43.2 billion to $43.6 billion, which compares to prior guidance of $43.1 billion to $43.6 billion
- Enterprise comparable sales growth of 1.0% to 2.0%, which compares to prior guidance of 0.7% to 1.7%
“Based on our data, we believe there is much untapped opportunity to serve New York clients in their homes,” said Barry.
As for next-day delivery, about 99% of customers live in a ZIP code where the service is available, up from 80% last quarter. The retail is also working on its store pickup option. On average 80% of Best Buy’s buy-online-pickup-in-store orders (BOPIS) are ready in less than 30 minutes and 40% of Best Buys online sales are coming from BOPIS.
Best Buy is also continuing to add new functionality to the website and mobile app. During the quarter it launched a Top Deals section in the app and on the website, for example. This leverages cost and gives Best Buy more flexibility to introduce multiple promotional cycles within the week. The Top Deals feature also provides a better user experience and helps customers find products with fewer clicks, resulting in higher and more consistent traffic throughout the week and better conversion compared to the old experience, said Barry.
Barry noted the app continues to see strong customer ratings and year-to-date usage is up more than 20%, while in-store app usage spiked more than 30%.
“Our store employees love the app, which has also been improved with their needs in mind,” said Barry. “They can now much more quickly see pricing, promotions, inventory and fulfillment times, through features such as Top Deals, and expanded availability options. The app also provides employees other recommended products if a certain product is out of stock in their store.”