Best Buy (BBY) Looks Appealing on Robust Digital Endeavors
Best Buy Co., Inc. BBY has been standing out in its efforts to maneuver the coronavirus jitters. The company’s extraordinary digital efforts to cater to consumers’ needs are commendable. Best Buy’s quick shift to a contactless curbside service-only operating model in the wake of the coronavirus outbreak has worked wonders. Moreover, it has been adding functionalities to its curbside-pickup service for driving frequency, retention and personalization opportunities. Biggies like Walmart WMT, Target TGT and Kroger KR have also been benefiting from the curbside-pickup model.
Going forward, Best Buy will continue offering great experiences such as curbside pickup, in-store consultations, and home-installation and digital-consultation services. The aforementioned initiatives are likely to continue boosting the company’s performance ahead.
Let’s Dive Deep
Best Buy’s online sales continued to grow in the second quarter of fiscal 2021, backed by the shift in consumers’ shopping patterns amid the pandemic. In fact, the company’s domestic comparable online sales increased 242.2% to $4.85 billion, mainly owing to higher traffic and conversion rates. As a percentage of overall domestic revenues, online revenues skyrocketed 3,700 basis points to 53.1%, up from 16.1% recorded in the prior-year quarter. During the quarter under review, the company witnessed strong demand for some of its newer products like digital health and fitness, at-home fitness equipment, sustainable living, outdoor activities and camping equipment.
Moreover, Best Buy continues to focus on improving the buy-online, pickup-in-store services. We note that all of the company’s stores will continue shipping out online orders, with nearly 250 locations being strategically positioned to ship out considerably higher volumes. The company is also continuing to add third-party physical-pickup locations for online orders to enhance flexibility. These sturdy efforts are likely to continue fueling Best Buy’s online revenues. Apparently, the company has been seeing solid domestic online sales in fiscal third quarter, with the metric up approximately 175% during the first three weeks of August.
Such robust digital endeavors have also been aiding Best Buy’s quarterly performances. During fiscal second quarter, both the top and bottom lines improved year on year and outshone the Zacks Consensus Estimate. The quarter marked the 11th straight quarter of an earnings beat for the company, with sales surpassing the consensus mark for the fourth successive time. As stores reopened, the company saw impressive growth trends across most of its categories. Management pointed out that large appliances and home theaters gained from more experiential shopping.
Furthermore, Best Buy appears well poised in the long run. Its goal of generating $50 billion revenues by fiscal 2025 looks achievable. In fiscal 2020, the consumer-electronics retailer reported enterprise revenues of $43.6 billion. Wrapping it up, we believe that the company’s tech-agnostic efforts and other well-defined initiatives position it well for future.
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