Best Buy’s quarterly financial results were downright Amazon-like: consecutive quarters of double-digit online sales growth and hot new products.
Best Buy’s quarterly financial results Tuesday were downright Amazon-like: consecutive quarters of double-digit online sales growth. Hot new products including virtual-reality headsets and techie watches. Words like “exploration” and “experimentation.”
Gone were the store-closing announcements of quarters past, along with talk of bad weather or other tired excuses for why consumers aren’t shopping (many of which we’ve heard from Target, Macy’s and other retailers in recent weeks).
Shares surged 19.6 percent to $39.23 on the news Tuesday, marking Best Buy’s biggest one-day stock gain since 2001.
For months, Wall Street had fretted about how Best Buy would deal with falling prices for TVs and other gadgets, as well as five straight months of falling U.S. electronics sales, according to the Census Bureau. Analysts followed by Bloomberg cut their 12-month stock-price target to around $32, from more than $40 last August.
Most Read Business Stories
- West Virginia factory is center stage in supply chain crisis as U.S. economy seeks to rebound from COVID
- Halt to 737 MAX deliveries stymies Boeing's recovery effort
- Pfizer COVID-19 shot expanded to US children as young as 12
- Melinda Gates' name listed on Seattle home deed ahead of divorce, but that doesn't mean she bought it
- Buying an electric vehicle? Here is some advice.
But Best Buy on Tuesday said its comparable sales rose 0.8 percent in the second quarter from the year before, which means the company bucked some scary industry trends.
Across the globe, smartphone shipments are forecast to increase just 3 percent this year from 2015, according to research firm IDC, compared with 30 to 50 percent growth rates in prior years. Apple, the biggest seller of tablets, just barely avoided a tenth consecutive quarter of falling iPad sales. Personal computer sales are likely to decline for the fifth straight year.
Those are daunting statistics for any consumer-electronics company. But it seems Best Buy is not only holding its own, it’s stealing sales from other, even more challenged retailers. It’s also benefiting from closures of its weakest stores.
Plus, it looks like it’s finally learning a thing or two from some of its biggest vendors, such as Apple. On Tuesday it outlined a series of pilot programs that sounded Apple-like, including classes on Wi-Fi use and digital photography.
Another initiative pulls a page from former Apple store mastermind Ron Johnson’s new startup, Enjoy, which sells high-end consumer electronics online but provides free in-home installation and setup. Best Buy said it’s testing a similar in-home adviser program, as well as on-demand, same-day services for those who need immediate tech help.
Perhaps more important, it has plunged resources into a more-streamlined online checkout process, faster shipping and better website features such as consumer reviews and product recommendations.
Best Buy is late to improving its online offerings; Apple and Amazon have done such things for more than a decade.
Still, its work seems to be paying off: Best Buy’s online sales growth has outperformed rivals Wal-Mart and Target for some time, and they are outpacing the overall U.S. e-commerce market. Online sales now are more than a tenth of Best Buy’s $40 billion yearly revenue.
Last year, the company opened a Seattle software-engineering outpost to work on e-commerce projects, joining brick-and-mortar retailers such as Sears and Staples that have turned to the region’s technology talent for help. It said it would fill 32,000 square feet of office space in South Lake Union, first with a few dozen employees, and as many as 100 over time
Some of Best Buy’s efforts may wind up being buzz-generating but short-lived experiments. And it’s not clear what took the company so long to realize Amazon and Apple had changed people’s expectations about shopping for consumer electronics. But for now it seems Best Buy has finally realized it’s 2016.