Best Buy (NYSE: BBY) reported “better-than-expected” first quarter revenues of $9.142 billion (up 1.1%) and continues to forecast for solid growth for the rest of the year. Meanwhile, its Total Tech Support program is helping the company understand client behavior better.
The Richfield, Minn.-based retailer expects growth of 1.5% to 2.5% for the remainder of the year. Its profits rose to 23.7% of the quarter, up from 23.3% last year. Best Buy’s U.S. revenues for the quarter were $8.48 billion, up 0.8% versus last year
New CEO Corie Barry told investors, “We are pleased with our Q1 performance. As we look to the full year, we are reiterating the guidance we provided at the beginning of the year. This outlook balances our better-than-expected Q1 earnings, the fact that it is early in the year and our best estimate of the impact associated with the recent increase in tariffs on goods imported from China.
“Specifically, I am referring to the increase in tariffs from 10% to 25% on the products on the $200 billion List 3 that originally went into effect last September.”
‘Tons of Surprises’ from Total Tech Support
Regarding its successful Total Tech Support program, which had more than 1 million subscribers in the first 10 months for its $199 fee, Barry says it has resulted in “a ton of surprises” from the increased interaction with customers that will help the company alter and improve its customer service.
Barry iterated to investors that the most important element of Total Tech Support is the strategic relationship-building it enables with customers. The first stage of annual renewals is just beginning, and renewal rates are in line with expectations.
“With us, it's a little trickier because our customers tend to have lower frequency overall than some other retailers, so it takes us a long way to figure out what are the longer-term customer behavioral implications,” says Barry.
She noted that Best Buy is “definitely seeing nice usage upfront in the program, and renewal rates have stuck at the levels we thought they would. And so we are seeing usage in line with what we thought. We are seeing renewal rates in line with what we thought.”
Barry admits there are still some questions regarding the program.
“We are seeing a ton of surprises, but we just don't have a lot of data yet. Is it pushing more purchase behavior? Is it keeping people engaged with Best Buy longer? We just need a little bit longer on the program to be able to give you some more information and data around that,” she says.
She lauded the company’s sales associates and says the program is helping them understand customer behavior better.