CE categories in decline.
Best Buy revenue decreased by 1.4% to $12.3 billion in comparison to the previous corresponding period, driven by a comparable sales decline of 0.9% and the loss of revenue from 11 large format and 31 Best Buy Mobile store closures.
A company statement confirmed that: “From a merchandising perspective, comparable sales growth in connected home, computing, headphones and home theatre was more than offset by declines in gaming, tablets, health & wearables and mobile phones.”
US online revenue of $2.3 billion increased 17.5% on a comparable basis primarily due to increased traffic and higher conversion rates. As a percentage of total domestic revenue, online revenue increased 300 basis points to 18.6% compared to 15.6% last year.
In its FY18 outlook, the company expects revenue to remain flat on a 52-week basis with comparable sales to increase up to 2.5%.
Product availability, weak demand in gaming hurts revenue
Best Buy chairman and CEO, Hubert Joly said, “We continued to gain share across the majority of categories and we believe, in aggregate. This was due to the quality of our assortment, a strong advertising and promotional cadence, and a superior customer experience across channels.”
“At the same time, our revenue was hindered by unprecedented product availability constraints across multiple vendors and categories, only some of which were anticipated. Additionally, there was considerably weaker-than-expected demand in the gaming category. I am proud of what we were able to achieve this quarter and want to thank all of our associates for their hard work, dedication and customer focus.
“In this next phase, we go from turning the company around to shaping our future and creating a company customers and employees love that continues to generate a superior return for our shareholders. We are driven by our purpose to help customers pursue their passions and enrich their lives with the help of technology.
“Our growth strategy is centered on three pillars, which are to (1) maximize the multi-channel retail business; (2) provide services and solutions that solve real customer needs; and (3) accelerate growth in Canada and Mexico,” he continued.
Best Buy CFO, Corie Barry added, “Our annual outlook is influenced by a number of factors, including expected share gains and the positive impact from our new initiatives, offset by our assumption that the industry growth will remain negative, similar to the last two years, and product availability issues will continue, particularly in the first half of the year.
“We are also expecting our investments and ongoing pressures in the business, including approximately $60 million of lower profit share revenue, to be offset by a combination of returns from new initiatives and ongoing cost reductions and efficiencies.”