Best Buy (NYSE: BBY) might be a poster child for how to successfully navigate the coronavirus pandemic. The Richfield, Minn.-based retail giant was able to retain a remarkable 81% of its domestic sales revenue for the last six weeks of its fiscal year 2021 Q1 that ended May 4, 2020. That time period coincides with the widespread lockdowns.
In total, the company’s revenues for Q1 2021 were $8.562 billion, down 5.3% from $9.142 billion last year. The company was able to hold the line on revenues by increasing its domestic online sales by a whopping 155%. Online sales now represent 42% of revenue, compared to just 15% for the same quarter last year. Moreover, the company nearly maintained the same profit margin at 23% versus 23.7% last year.
Best Buy’s store payroll expenses were lower compared to last year when including an employee retention credit of $69 million from the Federal CARES ACT. This employee retention credit is a payroll tax credit, which represented approximately 50% of qualified wages and health benefits paid to retained employees not working as a result of COVID-19. In mid-April, the company furloughed 51,000 employees.
“On behalf of all of us at Best Buy, I want to extend our sincere appreciation and gratitude to all those who are on the front lines working to keep us safe or maintain essential services, and we offer our heartfelt sympathy to all those who have lost someone to this virus or who are sick with COVID-19,” says Corie Barry, Best Buy CEO.
“In the middle of Q1, we shifted all our stores to a curbside-only operating model and were able to retain approximately 81% of last year’s sales during the last six weeks of the quarter, even though not a single customer set foot in our stores,” Barry continued. “The strong sales retention is a testament to the strength of our multi-channel capabilities and the strategic investments we have been making over the past several years.”
“As challenging as the current situation is, I am certain Best Buy will remain a strong, vibrant company that is well positioned to deliver on our purpose and thrive in a new and different environment. In fact, we have taken the opportunity to accelerate aspects of our strategy as this environment has quickly shifted the ways in which customers interact with retailers,” adds Barry.
Starting on March 22, Best Buy moved to a curbside-only model. On April 27, after implementing new safety guidelines, the company resumed large product delivery, in-home installations and repairs in approximately 80% of U.S. ZIP codes for new orders. On May 4, it reopened stores for appointment-only customers with strict social distancing practices and use proper protective equipment.