Online sales totaled $3.49 billion at Best Buy for its Q2 fiscal 2022 ended July 31, accounting for 31.7% of the retailer’s domestic revenue. Online’s share of total domestic revenue is double pre-pandemic times, executives said, according to an earnings call transcript from Best Buy. In the retailer’s fiscal Q2 2020, domestic web sales accounted for 16% of domestic revenue.
However, when compared with the same period a year earlier, during the height of the pandemic, fiscal Q2 online sales declined 28% to $2.73 billion. During that quarter, Q2 fiscal 2021, online sales accounted for 53.1%, or more than half, of domestic revenue.
The performance came against an unusual period last year, CEO Corie Barry said, as its stores then were limited to curbside pickup for about half the quarter due to closures imposed during the early days of the pandemic.
Compared with the more typical fiscal Q2 2020 period, results were still “very strong,” she said, with revenue up 24% and operating profit more than doubling.
Total domestic revenue rose 20.6% to $11.01 billion in the quarter from $9.13 billion in Q2 fiscal 2021. Total revenue reached $11.85 billion, up 19.6% from $9.91 billion a year earlier. Net earnings totaled $734 million, up 70.0% from $432 million. The key metric of U.S. same-store sales rose 21% in the second quarter compared with its fiscal Q2 2021.
Best Buy touts speedy online deliveries
Deliveries of online orders were “not only much faster than last year, [but also] faster than two years ago. We stack up extremely well versus our competition,” Barry said. “Using a third-party service, we analyzed competitor websites on a daily basis, and we consistently lead in the proportion of one day or less for published shipping time across a sample of higher-volume ZIP codes and higher-demand items.”
The retailer says about 60% of its online revenue was fulfilled by stores during the quarter, which includes in-store pickup, curbside pickup, ship-from-store or Best Buy employees delivering products to customers. 450 of the retailer’s stores fulfill web orders. Best Buy operates 1,145 stores in the United States, Canada and Mexico. 42% of online orders were picked up by customers at Best Buy stores, similar to a year earlier.
Last year, Best Buy piloted ship-from-store hubs by consolidating ship-from-store orders to a limited number of stores across the country. “As we evolve the model overall, we are using fewer stores than last year as hubs,” Barry said.
Best Buy is also in the middle of a project to remodel 13 stores, reducing the sales floor square footage and installing packaging station equipment and supplies to ship online orders. The project should be complete by the holidays, and the stores will fulfill about 25% of the retailer’s national ship-from-store orders, Barry said.
Best Buy also said on the call that before the holidays, it is building out what it is calling a virtual store, which will reside in one of its distribution centers. The store will showcase products and will be staffed by dedicated associates, but it will have no physical customers. Instead, consumers can interact with associates via chat, audio, video, and screen sharing in which they can view live demos, displays and physical products. Shoppers can find the virtual store on BestBuy.com.
“For example, you could be on our dot-com experience, click on a product you like and be connected via video to a Blue Shirt (Best Buy associate) in the Best Buy virtual store and never leave your living room,” Barry said. “Or you could be standing in a store, scan a bar code and be taken through your phone directly to this virtual store where an associate could answer your question.”
Best Buy is building out a new digital communication platform for this, which will combine call, chat, video, and screen sharing. “This will quickly and seamlessly put our customers in control of how and when they want to be served,” Barry said.
The retailer also said it is piloting mobile app checkout so that customers can quickly check out without needing to interact with an associate. It’s also expanding into additional merchandise categories such as outdoor living, selling products like patio furniture, grills, fire pits, and electric mowers as more consumers look to makeover or upgrade their outdoor spaces. Many of these new products are only available to purchase online, the retailer says.
“In the back half of the year, we expect to add more products in the fitness, beauty, sleep, pain management, vision, hearing, and electric transportation categories,” Barry said.
For its fiscal Q2 2022 ended July 31, Best Buy reports:
- Total revenue reached $11.85 billion, up 19.6% from $9.91 billion a year earlier.
- Net earnings totaled $734 million, up 70.0% from $432 million a year earlier.
- Online sales totaled $3.49 billion, down 27.8% from $2.73 billion a year earlier.
For the fiscal six months ended July 31, Best Buy reports:
- Total revenue reached $23.49 billion, up 27.2% from $18.47 billion a year earlier.
- Net earnings totaled $1.33 billion, up 125% from $591.0 million a year earlier.
- Online sales totaled $7.09 billion, down 13.4% from $8.19 billion a year earlier.
Percentage changes may not align exactly with dollar figures due to rounding.Favorite