Compared with the pandemic-distorted year-ago results, Best Buy Co. Inc. (No. 5 in the 2021 Digital Commerce 360 Top 1000) reported lower U.S. online sales in Q3 of its fiscal year 2022. But overall revenue hit a record for the period and the retailer expects full-year comparable sales to be 10.5% to 11.5% higher than in FY 2021.
Domestic online revenue for the quarter ended Oct. 30, 2021, was $3.44 billion, a year-over-year decrease of 10.1% on a comparable basis, compared with $3.82 billion a year earlier. Online revenue also decreased to approximately 31.3% of total domestic revenue, versus 35.2% a year earlier.
But compared with two years ago, online sales increased 145.7% in its fiscal Q3 2022, up from $1,40 billion Last year, demand for ecommerce soared due to restrictions imposed because of the COVID-19 pandemic and its online sales grew 173.7% in its fiscal Q3 compared with the previous year.
During a Nov. 23 earnings conference call, Best Buy CEO Corie Barry touted hhe growth in the number of same-day delivery orders, which grew 400% compared with a year earlier.
For same-day delivery, Best Buy employs delivery vendors such as Instacart, as wells as its own employees to make deliveries from about 400 stores. Almost 60% of Best Buy customers live within 10 miles of a delivery location, Barry said.
During the call, Barry said stores were an essential part of the electronics and appliances retailer’s online operation. During Q3, customers picked up 42% of online orders at stores, including one-third of online orders picked up curbside.
“Stores are crucial to our customer experience, and they need to be even more efficient and must keep pace with greater customer expectations,” Barry said during the call, according to a Seeking Alpha transcript. “For example, we know customers sometimes seek out in-person help to answer questions, and other times, they would rather use digital tools to learn about products or pick up their orders in our stores.”
Barry also said Best Buy experiences “varying degrees of inventory and supply chain challenges every holiday season, and this year will be no different.” But despite that, the retailer entered Q4 with 15% more inventory than at the same time last year.
Total revenue was up and guidance improves
Best Buy’s total domestic revenue (online and offline) was $10.99 billion, up 1.2% versus $10.85 billion last year. The increase primarily was driven by comparable sales growth of 2.0% and partially offset by the loss of revenue from permanent store closures in the past year, Best Buy reported.
Globally, Best Buy reported record Q3 revenue of $11.91 billion for the most recent quarter, up a fraction of a percent from $11.85 billion for the year-ago period.
Best Buy offered guidance on enterprise-wide financial results for the rest of FY 2022. That guidance included the following:
- Revenue of $16.4 billion to $16.9 billion in Q4.
- Comparable Q4 sales growth of -2.0% to +1.0%.
- FY 2022 revenue of $51.8 billion to $52.3 billion compared to the prior outlook of $51.0 billion to $52.0 billion.
- Comparable FY 2022 sales growth of 10.5% to 11.5% compared to the prior outlook of 9% to 11% growth
Best Buy’s Totaltech program rolls out
In early October, Best Buy rolled out its new Totaltech membership program nationwide. The program costs $199 per year and provides an array of services, including free around-the-clock tech support, up to 24 months of product protection on most Best Buy purchases, free delivery, standard installation, and no-cost haul-away services on most product replacements.
During the conference call, Barry said Totaltech—initially launched in selected markets in April—is doing well but did not provide membership numbers.
“It is early, and we have not rolled out all the product categories yet. But initial results are showing much higher conversion rates, as well as higher average order value than we see with historical chat interactions,” Barry said.
For the quarter ended Oct. 30, 2021, Best Buy reported:
- Domestic online revenue of $3.44 billion a decrease of 10.1% compared to $3.82 billion a year earlier.
- Enterprise-wide revenue of $11.91 billion for the most recent quarter, up a fraction of a percent from $11.85 billion for the year-ago period.
- Net earnings of $499.0 million, up 27.6% from $391.0 million a year earlier.
- Operating income of $670.0 million, up 19.4% from $561.0 million a year earlier
For the nine months ended Oct. 30, 2021, Best Buy reported:
- Enterprise-wide revenue of $35.40 billion, up 16.7% compared to $30.33 for the year-ago period.
- Net earnings of $1.83 billion, up 86.2% from $982.0 million a year earlier.
- Operating income of $2.24 billion, up 64.7% from $1.36 billion a year earlier
Percentage changes may not align exactly with dollar figures due to rounding.