Best Buy’s recently launched growth strategy, “Best Buy 2020: Building the New Blue,” is off to a good start in 2017. The retailer saw same store sales increase 4.4% in Q3, well ahead of last year’s 1.8% growth. Additionally, Best Buy saw net income increase 30% year-over-year, from $194 million ($0.60 per share) to $239 million ($0.78).
U.S. e-Commerce sales rose 22.3% in Q3, with higher conversion rates and higher average order values helping boost the company’s digital presence. This online revenue continues to account for a bigger chunk of Best Buy’s overall sales, jumping from 10.8% of the total last year to 12.7% today.
After releasing the results, the retailer raised its full-year outlook from an estimated 4% revenue growth to a range of 4% to 4.8% growth.
Best Buy first launched Best Buy 2020 in March 2017, so the program has yet to stand up to its first big test — a holiday season. The strategy, designed to take advantage of new growth opportunities, has driven the company to:
Build on its smart home business: 700 stores have new Alexa and Google experiences and 450 stores have a Best Buy Smart Home home automation and security offering powered by Vivint;
Pilot its Assured Living services, whichuse a non-invasive set of smart home connectors and sensors to help adult children remotely check in on the health and safety of their aging parents; and
Expand its “total tech support,” a free service designed to support customers and their technology issues 24/7 through in-home services. Best Buy employees with deep knowledge across product categories and brands go to customers’ homes and provide them with technology advice.The pilot exists in just over 200 stores across 10 U.S. cities.
Piper Jaffray analyst Peter Keith estimates Best Buy could capture 10% market share in the connected smart home sector, which would add more than a full percentage point of same-store sales growth through 2021.
Hubert Joly, CEO of Best Buy, noted that while the company had “moderate expectations” for mobile launches in Q3, revenue was “materially lower” than expected. This refers to the delayed launch of the iPhone X, which did not release in stores until November, after Q3 closed. The retailer says the late launch cost it $100 million in revenue for the quarter.