Best Buy (BBY) is the latest big name retailer (following fellow Minnesota-based retailer Target last week) to blow it out of the water for the third quarter as consumers have come to view it as an essential retailer during the pandemic.
It has also helped that Best Buy has adapted to its new environment.
Best Buy shares oddly fell slightly in pre-market trading on Tuesday despite third quarter same-store sales surging 23%. Non-GAAP operating margins rose 190 basis points from a year ago to 6.1%. Best Buy saw huge same-store sales gains in the U.S. pandemic-related categories: computing and mobile phones (up 47%); consumer electronics (up 29%); appliances (up 14%).
Here is how Best Buy performed versus Wall Street’s third quarter estimates.
Net Sales: $11.85 billion versus $10.98 billion
Same-Store Sales: Up 23% versus 13.8% increase
Diluted EPS: $2.06 versus $1.72
For Best Buy, the quarterly gains reflect its pivot to new consumer behaviors during the coronavirus pandemic. The company has moved to bring packages out to customers’ cars and also expanded its same-day delivery services. Most of the company’s stores reopened during the quarter after being closed earlier in the year for foot traffic because of the pandemic.
“We have some of our employees doing deliveries. We’re literally trying to make sure we get the customer whatever they want on their terms,” Best Buy CEO Corie Barry said at Yahoo Finance’s recent All Markets Summit. Barry explained Best Buy will continue with its rigorous store cleaning protocols adopted during the pandemic as well as store capacity control. Masks will remain a requirement for in-store shopping this holiday season.
Added Barry, “We are trying to make sure the customer feels like they are in control. And then making sure whatever they choose, we deliver it as safely as possible.”
Best Buy stores will be closed on Thanksgiving. But the stock may open for the bulls after the initial pullback given the quality of the quarter.
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