Dive Brief:
- Best Buy kept up its blazing pandemic-era growth through the third quarter, with U.S. sales up 21% year over year across the business to $10.9 billion.
- Most of that growth was driven by comparable sales, which rose 22.6% domestically despite declines in mobile phone sales. Comp growth was spread across most of the electronics retailers' categories, with the largest increases in computing, home theater and appliances, Best Buy said in a press release.
- Online revenue in the U.S. spiked 173.7%, hitting $3.8 billion, while digital's share of Best Buy's total domestic revenue more than doubled, coming to 35.2% in Q3.
Dive Insight:
Best Buy's Q3 performance builds on a solid Q1 and even stronger Q2 during the COVID-19 era, with all three quarters benefiting from online and omnichannel growth that the retailer has paved the way for through investments in its business for years.
Best Buy CEO Corie Barry attributed the retailer's spike in comp sales to its "unique capabilities, including our supply chain expertise, flexible store operating model and ability to shift quickly to digital, to meet what is clearly elevated demand for products that help customers work, learn, cook, entertain and connect in their homes," according to a statement.
In emailed comments, Moody's senior retail analyst Charlie O'Shea described Best Buy's Q3 numbers as a "blockbuster" that reflects "the effectiveness of its multi-channel capability, with both store and online performance continuing to benefit from its exceptional execution."
Online growth in particular "continues to put Best Buy in rarefied air among brick-and-mortar retailers, and as we saw during the period earlier this year when it unilaterally closed its stores, this online capability is sufficient to 'carry' virtually the entire business when necessary," O'Shea added.
Pointing to Best Buy's growth streak during the pandemic, Neil Saunders, managing director of GlobalData, said Best Buy is "on fire," adding to its sales the equivalent "4 million $500 televisions in the span of just 3 months" while also growing its bottom line by more than a third.
Saunders, in emailed comments, pointed to the retailer as "a bellwether for wider economic sentiment" given the pricey discretionary products it sells that require consumer confidence to buy. "Based on the numbers, a lot of shoppers clearly felt financially able to splash out," he said.
Giving Best Buy a boost, in Saunders' view, has been consumer focus on their homes in the era of social distancing. That has pushed up sales of appliances, home theater equipment and other products, while home office and learning needs have lifted sales in computing products, Saunders noted.
"While these various dynamics have created a helpful backdrop, Best Buy deserves praise for taking advantage of them," Saunders said. "Its omnichannel model is key and has helped it outperform pure online retailers. When it comes to higher-priced electronics, consumers are more confident purchasing from a retailer with stores, especially if they want to see and experience products before they buy."
