Best Buy, which
just reported stronger sales and a peppier holiday forecast, is hoping its seasonal “Open This Last” campaign will fan consumer lust for the present, that magical electronics gift that
inspires happy dances ’round the Christmas tree.
While Best Buy’s third-quarter numbers disappointed investors, who had expected bigger gains, the retailer is calling the results a major win. “Technology innovation is fueling demand and our strategy is resonating with our customers,” says Best Buy chairman and CEO Hubert Joly, in its release.
The Minneapolis-based retailer says sales rose to $9.32 billion, from $8.94 billion in the third quarter last year. And same-store sales in the U.S. climbed 4.4%. (Online sales rose 22.3%.) Those gains came despite disappointing results in mobile phone sales and the negative impact of hurricanes. And it raised its outlook for full-year sales to 4.0% to 4.8%.
Best Buy, which increased its ad spending in the period, says net earnings rose to $238 million, up from $194 million, is wooing holiday shoppers with a campaign called “Open this Last,” highlighting high-impact electronics gifts that get people “pa-rump-a-pum-pumped” for Christmas morning. One spot called MVP, or the Most Valuable Present for the Most Valuable Papa, stars a big-screen TV. And Anticipation has a present for everyone, even the cat, as it aims to inspire a “total family freak-out.”
“Everyone’s had that experience where there was that one gift you saved for last,” says Best Buy CMO Whit Alexander, on a company’s blog post. “It’s that thing you go to school the next day talking about, kind of like the BB gun in ‘A Christmas Story.’ The goal was to capture the joy of seeing someone’s reaction when you give them that perfect gift.”
Still, some observers think Best Buy still faces daunting competition. Morningstar says that in the shorter term, key product cycles will work in Best Buy’s favor, including smart home, TV, wearables, and gaming, and that gains in the U.S. housing market will keep demand for its home appliances strong, keeping comparable-store sales rising in the 3% range for the next two quarters.
“We're also encouraged by the response to in-store smart-home departments and in-home advisor services, which should be a gradual top-line contributor,” writes Morningstar analyst R.J. Hottovy. “Still, with Amazon testing in-home services as part of its Kohl's partnership and with other retailers exploring similar solutions, we still have a more conservative services outlook relative to the 2021 outlook.”