The stay-at-home lifestyle aligns very well with Best Buy’s in-store product mix. That translates to higher sales of appliances and big screen TVs now that consumers have cut back on dining out and travel. Computer and home office-related gear benefited from this trend as well.
Best Buy is also beefing up its e-commerce channel fulfillment resources so that click-and-collect oriented consumers can pick up their goods and avoid delivery charges. Whether the positive sales trend continues into Q4 and holiday shopping remains to be seen. A lot will be riding on future economic conditions and consumers’ financial capacity to buy big ticket discretionary items.
The following Retail Dive article reports more on this topic which is excerpted below:
- Best Buy on Tuesday reported that second quarter domestic revenue rose 3.5% year over year to $9.13 billion (overall revenue, with international sales, reached $9.9 billion). Online revenue rose to about 53.1% of domestic revenue, compared to 16.1% last year, the largest quarterly digital take in the company’s history, CFO Matt Bilunas told analysts.
- Domestic store comps, (including stores temporarily closed or using curbside-only fulfillment due to COVID-19), rose 5% despite the loss of revenue from 25 permanent store closures in the past year. Domestic online comparable sales rose 242.2% to $4.85 billion, “primarily due to higher conversion rates and increased traffic,” according to a company press release.
- Domestic gross profit declined about 120 basis points to 22.8% from 24% last year, mostly because of higher supply chain costs from the online sales increase and lower profit-sharing revenue from private-label and co-branded credit card arrangements. Net income rose to $432 million from $238 million last year.
Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group