Although it has wrestled with supply chain and other challenges, Best Buy still managed to top Wall Street earnings and revenue estimates in the third quarter.
Best Buy beat a Yahoo Finance-published analyst consensus adjusted earnings per diluted share estimate of $1.91 and topped a revenue estimate of $11.58 billion.
Net revenues were $11.91 billion, essentially flat to the year-earlier quarter, while domestic segment revenues increased to $11 billion from $10.9 billion from the year-past period, the company stated. Comparable sales increased $1.6% while domestic comps gained 2% in the period year over year. Domestic online sales slipped 10.1% versus the year-prior quarter. It should be noted that enterprise comps increased 23%, domestic comps increased 22.6% and domestic online comps increased $173.7% in the quarter a year before.
Domestic comp growth drivers among merchandising categories were appliances, home theater and mobile phones, Best Buy pointed out, partially offset by a decline in computing sales.
Operating income was $670 million versus $561 million in the quarter a year previous. Adjusted operating income was $694 million versus $728 million in the period a year earlier.
In a conference call, Corie Barry, Best Buy CEO, said the company faces supply chain challenges including delays and higher costs but has been adapting with actions such as pulling up product flow, adjusting store assortment based on availability, acquiring alternative transportation and leveraging vendor relationships. As Best Buy entered the fourth quarter, it had 15% more inventory on hand compared to the same time a year past, and Barry expressed confidence in the retailer’s ability to serve customers throughout the holiday.
The company is trialing new formats and labor deployment to address a changing marketplace where online sales and a range of ways to deliver products to consumers are becoming more important, she noted. It also is turning to solutions-style merchandising, so adding to product categories such as wellness and outdoor, where, for example, Best Buy is adding more furniture among other items.
Beyond supply chain, Barry said Best Buy is facing an increasing challenge from organized retail theft, which the company is trying to address by adding security guards, locking up certain products and working with vendors on how to stage product more securely.
In announcing the financial results, Barry said, “We delivered record Q3 results, including 2% domestic comparable sales on top of 22.6% last year, as our leaders continued to drive new ways of operating and our employees continued to do amazing things to support our customer’s technology needs in knowledgeable, fast and convenient ways. Our omnichannel capabilities and our ability to inspire and support across all of technology in a way no one else can means we are uniquely positioned to seize the opportunity in this environment and in the future.”
Barry asserted the consumers “continue to work, entertain, cook and connect at home, and while customers are returning to stores, digital sales were still more than double pre-pandemic levels, and phone, chat and in-home sales continued to grow. During the third quarter, we reached our fastest small-package online shipping times ever as our same-day delivery was up 400%, and we nearly doubled the percent of products delivered within one day compared to last year.”
Matt Bilunas, Best Buy CFO, added, “We are looking forward to a strong holiday season and believe we are extremely well-positioned with both the tech customers want and fast and convenient ways to get it, We are committed to driving initiatives that will deliver future growth, and our Q4 outlook reflects continued investments in our new membership program, technology, advertising and our health strategy.”