There was plenty of good news when Best Buy (NYSE:BBY) reported the financial results of its just-completed first quarter. The company exceeded analysts' expectations for same-store sales, as well as both top- and bottom-line growth. The results also outpaced the guidance provided by Best Buy just three months ago.
Enterprise revenue grew to $9.1 billion, up 7% year over year, and adjusted earnings per share of $0.82 increased 37% compared to the prior-year quarter. This exceeded analysts' expectations for revenue of $8.73 billion and adjusted earnings per share of $0.74.
The earnings release provided all the usual metrics, but Best Buy's management supplied a wealth of additional information that gave investors more insight during the conference call to discuss the results. Read on to find out what company executives had to say about its tech support program, connected devices, and how the lines are blurring between online and offline transactions.
Speak to the Geek
Tech support is an area of significant focus for Best Buy, as it provides customers with services that typically aren't available from many of its competitors. The company is seeking to leverage its Geek Squad expertise with a new program it calls Total Tech Support, which it says helps customers get the most out of technology "well beyond the initial purchase transaction." Hubert Joly, Best Buy's chairman and CEO, explained:
For $199 per year, members get unlimited Geek Squad support online, via chat, in-stores, [or] in the palm of their hands with the new Best Buy home app. All their technology is covered no matter where or when they brought it, as we believe that support should not be limited to a specific product and believe that the customer need is to have all their technology work together.
Joly went on to say that the company is rolling out the program nationwide and that it is in keeping with the company's strategy of improving the customer experience and helping to enrich their lives through technology. This will result in a deeper connection with customers and could spur future purchases.
One of the potential drivers for Best Buy going forward is the number of connected devices and how technology is increasingly embedded in more and more products and categories. Joly cited light bulbs, doorbells, large appliances, and small appliances as examples. He sees broad implications and believes this could be just the beginning:
Of course, what's exciting about the future is that we are just at the beginning of this era. The penetration of these devices and the use cases are just beginning ... we're in a cycle ... [that] will continue to deepen and broaden. And so, I think we have this positive environment.
One of the specific use cases Joly referenced was the potential for the technology to help older adults stay in their homes longer, saying this could improve health and wellness and could also contribute to reduced healthcare costs.
Best Buy will certainly benefit not only from the opportunity to sell these device, but to assist customers with installation and future troubleshooting.
The blurring of online versus in-store sales
When asked if customers were more likely to come into the store for purchases of technologically complex products, CFO Corie Barry admitted there was a need among consumers "to touch, feel, make final decisions," particularly with regard to high price point items.
More importantly, though, she said there was "more interplay between all the channels," and "we continue to see material increases in in-store pickups, even with all of the fulfillment options that are available." She went on to say that this illustrates the point that it's becoming increasingly difficult to perfectly isolate and assign a sale to a particular channel, and "talking about their growth individually is exceptionally hard to do."
Joly also added that Best Buy stood to gain from its ability to reach customers "across technology and product categories, and ecosystems, and across multiple touch points ... online, in stores, and then in their homes," which he believes gives the company a "unique competitive advantage."
What it means
Each of these discussions show that Best Buy is playing to its strength and leveraging its technological expertise to build relationships with its customers that will lead to sales far into the future. As the world of devices becomes increasingly more complex, Best Buy will be there to help its customer keep up.