Best Buy solidly beat its own outlook and edged past analyst expectations for the third quarter, reporting $9.59 billion in revenue, with domestic comparable store sales growing 4.3% year over year, according to a company press release.
The retailer also said it was raising its full-year revenue guidance to the range of $42.5 billion to $42.9 billion, with enterprise comparable sales growth expected to be between 4% and 5% for the full fiscal year.
Best Buy also reported a 12.6% increase in domestic online revenue to $1.21 billion, crediting higher conversion rates and increased online traffic. The growth rate was well below the 22% seen in the year-ago quarter, but online revenue as a percentage of total domestic revenue did increase to 13.8% from 12.7% last year.
Best Buy has been running on the energy of a strong rebound for a while now, and there was a sense before this earnings report that the retailer's comeback itself may be running on fumes. Those concerns may be put on the back burner for at least another quarter, but can Best Buy put together another strong revenue run through the holidays?
Overall concerns linger, especially as Best Buy has upped its investment in services over the last year through programs like In-Home Advisor and Total Tech Support, as well as the acquisition of mobile health and safety services provider GreatCall. Even with its aggressiveness in the service segment, Best Buy faces increasing threats on the tech services front from Amazon and others, and investments to build up service programs often take a while to pay off.
Best Buy's earnings performance comes just days after Amazon and Apple forged an agreement for more Apple devices to be sold on Amazon. The move is seen as most detrimental to small marketplace sellers, but it can't be too good for Best Buy either.
However, Best Buy Chairman and CEO Hubert Joly sounded pleased with the company's progress on the Tuesday morning earnings call, saying device sales remained strong during the most recent quarter and that progress with new services was proceeding as expected.
"Customers are responding to the unique and elevated experience we're building," Joly said, adding that sign-ups for the Total Tech Support program, launched last May, are "tracking in line with our expectations."
Joly also said the retailer increased its number of In-Home Advisors, and improved the program by making it easier for customers to sign up for in-home assistance while they are in stores. Regarding GreatCall, Joly said Best Buy has already added dedicated end caps in stores to showcase the services GreatCall provides to senior citizens and others.
While the retailer did raise full year expectations, its fourth quarter outlook appeared somewhat muted as holiday seasons go. Best Buy said it sees $14.4 billion to $14.8 billion in revenue for Q4, with enterprise comparable sales in the range of 0% to 3% growth. Last year's holiday quarter was a winter windfall for Best Buy and most retailers, and this caution may reflect that last year's performance could be difficult to match.