Fueled by improved execution, demand for new mobile phone models, and a strong macro-economic backdrop, Best Buy posted another killer quarter, assuring its continued place in the retail pantheon.
Total revenues rose 2.9 percent, to $9.6 billion, for the three months ended Nov. 3, and net earnings increased nearly 16 percent, to $277 million.
In the U.S., revenue rose 3.1 percent, to $8.8 billion, and comparable store sales increased 4.3 percent on top of last year’s 4.4 percent gain, representing the sixth consecutive quarter of comp increases of 4 percent or better.
Online revenue rose 12.6 percent year over year, to $1.2 billion, representing 13.8 percent of total U.S. revenue, up from 12.7 percent a year ago.
The gains came despite the closure of 287 Best Buy Mobile and 19 big-box flagship stores over the past year, as well as a 70-basis-point impact from an unfavorable calendar shift.
Best Buy also faced higher transportation costs, capital investments and the impact of the national rollout of the retailer’s Total Tech Support program, an annual Geek Squad subscription service, which together lowered the domestic gross profit rate to 24.4 percent, from 27.7 percent last year. But the pressures were partially offset by improved product margins, the company said.
On the merchandising front, top selling categories included mobile phones, gaming, appliances, wearables, headphones and smart home, which were partially offset by a decline in tablet demand.
In a statement, Best Buy chairman/CEO Hubert Joly credited the favorable retail environment, and customer response to “the unique and elevated experience we are building,” which includes Total Tech Support, its In-Home Advisor program, and the acquisition of Jitterbug owner GreatCall.
Looking ahead, the company expects to continue on its current roll. Accordingly, it raised its fiscal fourth-quarter financial guidance from $14.4 billion in total sales to $14.8 billion, and flat U.S. comps to an increase of 3 percent, aided in part by the same calendar shift that crimped the third quarter.