Best Buy Co. Inc. reported online sales declined 7.1% in the second quarter ended July 29, 2023.
Online sales made up 31.0% of total revenue, staying flat with the previous year. Total domestic revenue also declined 7.1% to $8.89 billion. The decline can largely be attributed to a 6.3% decline in comparable sales.
“Our financial results were better than expected, and they reflect a consumer electronics industry that remains challenged due to the pull-forward of demand in prior years and the various macroeconomic factors that we are all too familiar with,” CEO Corie Barry said in a written statement. “We continue to expect that this year will be the low point in tech demand after two years of sales declines. Next year, the consumer electronics industry should see stabilization and possibly growth driven by the natural upgrade and replacement cycles and the normalization of tech innovation.”
Best Buy ranks No. 7 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers.
Best Buy online sales
Mobile sales now make up a significant portion of online sales due to improvements to the app, Best Buy said. 20% of online revenue comes through the mobile app. Customers who use Best Buy’s app engage with the retailer three times more often than consumers who use other digital platforms, the retailer said.
Buy-online-pick-up-in-store (BOPIS) sales also remain popular with Best Buy customers. BOPIS sales account for slightly over 40% of online sales.
Though online sales declined year over year, they remain about twice as high as they were before the pandemic. As a result, “we needed to more efficiently allocate our labor cost considering the higher online sales have resulted in a decline in physical store traffic and sales,” Barry said in an earnings call.
Sales by category
Appliances, home theaters, computing and mobile phones all declined in the quarter, the electronics retailer said in a statement. Some of the decline was offset by growth in gaming, but not enough to stop an overall decline.
Computing and mobile phones made up 41% of revenue, more than any other merchandise. Sales were down 6.4% year over year. Consumer electronics made up another 30% of revenue, down 5.7%. Appliances saw the largest decline, down 16.1% year over year to 16% of sales.
Best Buy is suffering from the dual trends of a cost-of-living crisis impacting its customers and a decline in home sales, according to retail analyst Neil Saunders of retail analysis firm GlobalData.
As consumers lack disposable income to buy new electronics and aren’t in the market to renovate their home appliances, they’re less likely to have a reason to visit Best Buy, Saunders says.
“So Best Buy not only loses out on the big-ticket buys but sales in smaller value areas like accessories and cables also weakens. Other non-specialists selling electronics, like Amazon, Target, and Lowe’s, at least drive traffic for other reasons and have a greater possibility of converting someone to buying electronics products,” he says.
Best Buy earnings
For the quarter ended July 29, 2023, Best Buy reported:
- Domestic online revenue declined 7.1% to $2.76 billion.
- Best Buy online sales drove 31.0% of revenue.
- Domestic revenue declined 7.1% to $8.89 billion.
For the six months ended July 29, 2023, Best Buy reported:
- Comparable online revenue declined 9.7%.
- Domestic comparable sales declined 8.4%.
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