With online sales as the main driver of growth, Best Buy’s (NYSE: BBY) third quarter report for fiscal year 2021 certainly reflect the effects of COVID-19. Online sales represented 35% of the company’s total revenues for 13-week third quarter ended October 31, 2020.
In total, the Richfield, Minn.-based company had $11.8 billion in revenues, of which $10.85 billion were in the United States. Those U.S. revenues are a jump of 21%. Worldwide revenues rose 23% compared to last year’s Q3. Moving forward, the company was guarded about where the market might head, given the ongoing pandemic.
Meanwhile, Best Buy says the number of customers using its Total Tech Support service program remained steady at 2.3 million, but there was an uptick in interaction during the pandemic.
“For Total Tech Support, we did grow the member count after holding pretty steady in the first half of the year,” says CEO Corie Barry. “We haven’t been updating that number quarterly and we’re not going to now. But for reference, the last we shared was about 2.3 million members at the end of fiscal 2020. We definitely saw usage of the remote support offering continue to increase during the pandemic. And we also saw improved trends compared to earlier in the year as it relates to things like installation and repair.”
Barry adds, “Today, we are once again reporting strong quarterly results in the midst of unprecedented times. Our comparable sales grew a remarkable 23% as we leveraged our unique capabilities, including our supply chain expertise, flexible store operating model and ability to shift quickly to digital, to meet what is clearly elevated demand for products that help customers work, learn, cook, entertain and connect in their homes. The current environment has underscored our purpose to enrich lives through technology, and the capabilities we are flexing and strengthening now will benefit us going forward as we execute our strategy.”
Barry continues, “Our teams showed empathy, ingenuity and extraordinary execution throughout the quarter. I am very proud of the way our teammates are helping not only our customers, but each other and their communities.”
“From a profitability standpoint, our better-than-expected sales resulted in significant operating income rate expansion and earnings growth,” Barry continues. “This strong financial performance is allowing us to share our success with the community, our shareholders, and, importantly, our employees. We recently made a $40 million donation to the Best Buy Foundation to accelerate the progress towards our goal to reach 100 Teen Tech Centers across the U.S. In addition, we plan on resuming our share repurchase program during Q4 of this fiscal year.”
Barry adds, “For our employees, we raised our starting wage to $15 per hour, paid recognition bonuses to field employees and reinstated our short-term incentive compensation. In the early days of the pandemic, we established an employee hardship fund that continues to provide emergency funds to our employees who are sick, have loved ones who are sick or are experiencing financial hardship. In addition, in recent weeks, we have resumed our 401(k) employer match and invested significantly in our employee well-being benefits.”
Best Buy CFO Matt Bilunas says, “While the demand for the products and services we sell remains at elevated levels as we start the fourth quarter, it is very difficult for us to predict how sustainable these trends will be due to the significant uncertainty related to the various impacts of the pandemic. Thus, similar to the last two quarters, we are not providing financial guidance today.”
Best Buy U.S. Numbers
Domestic revenue of $10.85 billion increased 21.0% versus last year. The increase was primarily driven by comparable sales growth of 22.6%, which was partially offset by the loss of revenue from permanent store closures in the past year.
From a merchandising perspective, the company generated comparable sales growth across most of its categories, with the largest drivers being computing, home theater and appliances. These growth drivers were partially offset by a decline in mobile phone sales.
Domestic online revenue of $3.82 billion increased 173.7% on a comparable basis, and as a percentage of total Domestic revenue, online revenue increased to approximately 35.2% versus 15.6% last year.