Best Buy’s sales slump continued in third-quarter earnings results, with comparable sales falling 2.9%, marking the retailer’s 12th straight quarterly decline. Slower demand for appliances, home theater systems, and gaming products drove the drop, though growth in computing and tablets helped offset some of the losses, according to the retailer.
Net sales for the quarter, which ended Nov. 2, fell to $9.45 billion from $9.76 billion a year ago. Online sales also dipped 1% year over year but were an improvement compared to the 9.3% decline seen in the same quarter last year.
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. Digital Commerce 360 projects Best Buy ecommerce sales in 2024 to decline 3.9% to $12.59 billion.
Best Buy ecommerce sales
Best Buy Q3 online sales and earnings highlights
During Best Buy’s earnings call, CEO Corie Barry cited “overall ongoing macro uncertainty, customers waiting for deals and sales, and distraction during the run-up to the election” as factors impacting performance. The retailer is now banking on early holiday deals and promotions to revive demand, as shoppers continue to seek value amid economic headwinds.
During the third quarter, comparable sales — which include online sales and stores open at least 14 months — dropped 2.9% overall, with a 2.8% decline in the U.S.
Key domestic categories experienced steep declines:
- Appliances: Comparable sales down 14.7% year over year.
- Entertainment: Down 18.8%.
- Consumer electronics: Down 5.8%.
There were some bright spots. Domestic computing and tablets saw a 5.2% increase in comparable sales year over year, with laptops leading the category with 7% growth in the third quarter, Barry noted.
Other financial results:
- Enterprise revenue: $9.45 billion, missing analyst expectations of $9.63 billion.
- Net income: $273 million, up from $263 million a year earlier.
- Non-GAAP operating income rate: 3.7%.
Omnichannel investments pay off
Earnings results showed Best Buy’s domestic online sales totaled $2.73 billion in Q3. That was a 1% decline from the quarter a year ago, but an improvement over the previous quarter’s 1.6% year-over-year drop.
Online revenue accounted for 31.4% of total domestic revenue, up from 30.6% last year.
Barry noted that in-store pickup now accounts for about 45% of domestic digital sales, a figure that has steadily increased over the past few years. More than 90% of these orders are ready for customers within 30 minutes. Moreover, a new live tracking tool for in-home deliveries is also gaining traction, with over 60% of customers using the feature and providing “overwhelmingly positive” feedback,” she said.
As well, improvements to Best Buy’s paid membership program made last year have driven member growth and helped boost gross profit rates, Barry said.
“Overall, we are managing well what we can control in what remains a volatile environment,” she said.
Holiday shopping brings optimism
To jumpstart the holiday season, Best Buy launched its Black Friday deals a week early. Barry reported a 5% increase in enterprise comparable sales for the first three weeks of November, as shoppers look for value amid persistent inflation.
To help shoppers navigate gifting, Best Buy relaunched its Holiday Gift Ideas section on its website, offering gift ideas and curated gift lists. It also introduced the AI-powered Gift Finder in its app, offering an interactive and personalized gifting experience for shoppers.
Other major initiatives Best Buy has announced include:
- A U.S. third-party online marketplace, set to launch next year.
- A new tagline, “imagine that,” to emphasize discovery and the customer experience.
- Expanded delivery options, offering two-hour windows up to seven days in advance, with a nationwide rollout planned for next year.
- AI-powered efficiencies, including optimized delivery routes and an AI-powered virtual assistant that can handle 60% of chat requests.
- Rebranding of 167 Canadian stores, formerly The Source, to Best Buy Express.
Looking ahead
Like other retailers, Best Buy is preparing for potential tariffs on goods from Mexico, Canada, and China under incoming President Trump. CEO Corie Barry said during the earnings call that China accounts for about 60% of the company’s cost of goods sold, with Mexico as the second-largest source of imports.
Tariff-related costs are typically split among vendors, the retailer, and customers, Barry explained.
“These are goods that people need, and higher prices are not helpful,” she said.
The retailer remains heavily reliant on vendor-controlled supply chains. While Best Buy directly imports only 2% to 3% of its products, Barry noted the company has already shifted much of that production out of China.
Looking ahead, Best Buy revised its full-year revenue outlook to $41.1 billion to $41.5 billion, down from its earlier projection of $41.3 billion to $41.9 billion. The retailer now anticipates comparable sales to decline between 2.5% and 3.5%, a steeper drop than its previous estimate of 1.5% to 3%.
Check back for more earnings reports. Click here to read about last quarter‘s Best Buy online sales.
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