Why Best Buy Delivered Mixed Results, Subdued Outlook in 3Q16
Best Buy (BBY) is taking several initiatives for the crucial holiday season. In its 3Q16 conference call, Best Buy’s chairman and chief executive officer, Hubert Joly, discussed the launch of Blue Assist, a new feature in the company’s mobile app. It allows customers to simply shake their device to get live help with products and orders through chat, call, e-mail, or in-store associates. In 3Q16, Best Buy’s online comparable sales increased 18% due to higher conversion rates and increased traffic.
To boost its same-store sales, Best Buy is offering an extensive merchandise assortment of technology products, mainly in 4K TVs, health and wearables, appliances, connected or smart devices, drones, and other giftable items. Best Buy reported same-store sales growth of 0.8% in 3Q16. The iShares Russell Mid-Cap ETF (IWR) has 0.2% exposure to Best Buy.
The company now has 1,100 additional stores-within-a-store on top of 3,700 of these stores last year. For instance, the company has 630 Samsung (SSNLF) (005930.KS) and 380 Sony (SNE) stores-within-stores and 78 Magnolia design centers to boost home theater sales. In computing, the company rolled out over 150 additional Windows stores in 3Q16, crossing 800 stores now. The company also updated over 130 of its Apple (AAPL) stores-within-a-store. Best Buy now has 500 latest-generation Apple stores-within-a-store.
In mobile phones, the company added 225 Verizon (VZ) and 225 AT&T stores-within-a-store. These mini-stores boast highly trained specialists who assist consumers with a wide set of connected or smart devices. Best Buy’s CEO also disclosed the completion of the planned rollout of Pacific Kitchen & Home stores-within-a-store for fiscal 2016. The company has 176 of these stores now.
Best Buy has also been working on enhancing its delivery capabilities through its ship-from-store and in-store pick-up facilities. The company is focusing on its supply chain optimization to ensure earlier store replenishments and higher order fill rates. Best Buy’s holiday season plans also involve attracting consumers with a range of services, including free Geek Squad setup on top tech gifts.
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