Best Buy Co., Inc. (NYSE: BBY) reported domestic revenue growth of 3.6 percent to $8.5 billion for the third quarter ending Oct. 28, 2017. Overall, its growth was 4.4 percent to $9.3 billion both U.S. and internationally. Company profit margins remained the same at 24.7 percent. The company’s online sales were the big winner, up 22 percent year over year for Q3.
Meanwhile, Best Buy, the No. 2 company on the CE Pro 100, is bullish on its new in-home advisory service for the holiday season. From a merchandising perspective, the company generated growth across almost all of its categories, with the largest drivers of comparable sales being appliances, computing and smart home.
Domestic online revenue of $1.1 billion increased 22.3 percent on a comparable basis primarily due to higher conversion rates and higher average order values. Domestic gross profit rate was flat versus last year at 24.7 percent.
“In the third quarter, we delivered strong top and bottom line results with 4.4 percent comparable sales growth and 30 percent EPS (earnings per share) growth,” said Hubert Joly, Best Buy chairman and CEO. “Technology innovation is fueling demand and our strategy is resonating with our customers. We are also making significant progress against our Best Buy 2020 strategy and are excited about the opportunities for long-term value creation. And while we are investing in key initiatives and capabilities, we are also able to generate significant returns for our shareholders through the growth of our EPS and our capital allocation strategy.”
Joly continued, “Our Q3 results include the negative impact of two significant factors. First, despite our moderate expectations for mobile phone launches in the quarter, revenue in the mobile category was materially lower than expected. This was due to the fact that a major new phone did not launch until November, which is in our Q4. The related revenue impact in the quarter was more than $100 million.
“Second, like most retailers, we felt the impact of the natural disasters in south Texas, Florida, Puerto Rico and Mexico. We estimate the loss of revenue impacted our Enterprise comparable sales by 15 to 20 basis points, and that the related costs negatively impacted our EPS by approximately $0.03.”
In-Home Advisory Service Primed for Holidays
Joly concluded, “Looking ahead, we are very excited about our plans for holiday, including a curated assortment of great new technology products, free shipping with no minimums, and a range of new capabilities such as our new in-home advisor program, an updated gift center, and same-day delivery in 40 cities. We believe we are well positioned for a successful season and therefore, we are raising our financial outlook for the fourth quarter and for the year. I would like to thank all of our associates for their work this last quarter, and for what they will do this holiday season.”
Best Buy has raised its outlook for Q4 from 4 percent revenue growth to 4.8 percent. The company's stock fell early on the Q3 report as it fell short of analyst's expectations.