Best Buy posted stronger-than-expected Q2 earnings, propelled by consumer demand for tablets and other electronics. Still, Best Buy reported a 1.6% year-over-year drop in online sales, alongside a 2.3% drop in comparable sales domestically in its fiscal quarter that ended Aug. 3.

Best Buy CEO Corie Barry said the retailer found consumers can be enticed to purchase given the right promotions and conditions.

“In this environment, many categories, including major appliances and TVs, continued to be very promotional in pursuit of stimulating interest and sales,” Barry said.

Best Buy ranks No. 8 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers. It falls under the Consumer Electronics category.

Best Buy Q2 online sales and earnings highlights

The consumer electronics retailer’s domestic revenue for the quarter dropped to $8.6 billion from $8.9 billion during the same period a year earlier. Enterprise revenue was $9.29 billion, down from $9.58 billion the year before. Analysts had expected sales to drop to $9.24 this quarter.

In the meantime, the company voiced optimism, raising its guidance for the end of the year, lifting revenue expectations to $41.9 billion from $41.3 billion.

“As we look to the back half of the year, we expect our industry to continue to show increasing stabilization,” said Matt Bilunas, chief financial officer at Best Buy. “Last quarter, we said we believed we were likely trending towards the midpoint of our original comparable sales guidance and today we are updating our annual comparable sales guidance range to a decline of 1.5% to 3.0%.”

Other highlights from the report include:

• Enterprise revenue: $9.3 billion vs. $9.2 billion expected.
• Enterprise comparable sales declined 2.3% during Q2, compared with a 6.2% drop a year earlier.
• Non-GAAP operating income rate of 4.1%. The company said it expected 3.5%, but selling, general, and administrative expenses didn’t materialize as high as projected.
• Best Buy reported a net income for the quarter of $291 million compared with $274 million a year earlier.

Best Buy sees strength in Q2 digital demand

The company’s digital footprint was consistent. Best Buy online sales comprised 31.5% of domestic revenue in Q2.

“Our omnichannel operations provided strong support for our Q2 online sales,” Barry noted.

She went on to say that almost 60% of packages are delivered or available for pickup within one day.

“And more than 40% of our digital sales are picked up in stores by our customers with more than 90% of these orders available within just 30 minutes,” Barry said.

She also highlighted the growth of Best Buy’s paid membership program, My Best Buy Plus.

“We grew the base of members, and the impacts from the changes we made to the program last year once again delivered better-than-expected profitability,” Barry said.

How Best Buy is investing in its online presence

Barry noted that Best Buy is continuing to strengthen its online presence with positive results. The company has been beta-testing personalized homepages tailored to individual histories and interests.

“Testing has shown that customers receiving our personalized homepage are engaging in content, product and tools in our app, almost 70% more than customers who didn’t receive it,” Barry said, adding that during the quarter, Best Buy completed a rollout for personalization to all app users.

“We also scaled other new app experiences, including a digital wallet that provides easy access to payment methods, coupons and offers, and deal alerts that allow customers to be notified when their favorite products go on sale,” Barry explained.

Beyond the app, Barry said Best Buy is focused on making the mobile shopping experience even better with faster browsing, more sophisticated search and enriched content.

Check back for more earnings reports. Click here to read about last quarter‘s Best Buy online sales.

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