After an impressive Q2, Best Buy is once again proving wrong anyone who is still predicting losses for this electronics retailer. At the end of Q3, Best Buy is looking at positive growth, in part because of increased sales in home theater, mobile phones, wearables and connected home products.
The company reports that results are “better than expected.” The company compares its third quarter, ended October 29, 2016 (Q3 FY17), to its last third quarter, ended October 31, 2015 (Q3 FY16):
- Domestic segment comparable sales increased 1.8%
- GAAP diluted EPS increased 62% to $0.60
- Non-GAAP diluted EPS increased 51% to $0.62
“We are pleased to report today growth on both our top and bottom lines,” says Best Buy chairman and CEO Hubert Joly. “We are excited by the continued product innovation we are seeing, the role we play for customers, the growth opportunities in front of us, the quality of our execution and the strength of our financial performance.”
Best Buy saw domestic revenue of $8.2 billion increase 1.3 percent versus last year, driven by sales growth of 1.8 percent. This growth, however, is offset by the loss of revenue from 14 large format and 23 Best Buy Mobile store closures.
The company saw significant sales growth in home theater, mobile phones, wearables and connected home, which offset a decline in gaming.
Domestic online revenue also increased by 24.1 percent due to increased traffic, higher order values and higher conversion rates. Online revenue increased to 10.8 percent versus 8.8 percent last year (as a percentage of total domestic revenue).
Domestic GAAP and non-GAAP gross profit rate was 24.7 percent versus 24.1 percent last year. Best Buy credits the increase to improved margin rates in the computing and home theater categories, which were partially offset by the mobile category.
“From a revenue standpoint, we are excited by the rate of technology innovation, the quality of our assortment and our ability to execute,” says Corie Barry, Best Buy CFO. “That being said, we have updated our original expectations to incorporate the impact of recent product recalls and the fact that certain products will simply not be available for sale during our fourth quarter. The expected impact of these recalls on our fourth quarter Domestic revenue is approximately $200 million. With that incorporated, our fourth quarter Enterprise revenue guidance is $13.4 to $13.6 billion.”