Best Buy Flies High On Exceptional Ad Strategy

Best Buy defied expectations with its strong third-quarter results, buoyed by a back-to-school ad strategy that boosted computer sales.

The Minneapolis-based retailer says the strong results are more evidence that its “Building the New Blue” growth plan is paying off, even as other retailers are struggling.

Revenue for the chain climbed to $9.76 billion, up from $9.59 billion in the year-ago period, with same-store sales rising 1.7%. Online sales jumped 15%. And net income rose to $293 million, up from $277 million in the same period a year ago.

The most significant gains came in appliances, headphones, tablets, services and computing. Gaming and home theater sales declined.



In its announcement, CEO Corie Barry says the chain’s focus on “fast and convenient fulfillment” is appealing to customers. “In the near term, we are excited about our holiday plans,” she says, including free next-day delivery for many online orders, or in-store pickup within an hour of ordering.

In addition to raising its forecast for the full fiscal year, Best Buy also says it expects gains in the year ahead, anticipating comparable-store sales growth of between 0.5% to 3.0%.

Analysts are impressed with the company’s gains, especially since they come on top of strong prior-year performances. “Management has done a phenomenal job, in spite of various headwinds, most notably tariffs,” writes analyst Michael Pachter, who follows the company for Wedbush Securities.

Pachter says that by “aligning its weekly ads to drive back-to-school laptop sales,” Best Buy saw a 3% increase in computing sales. “And the domestic appliance segment continues to expand, [climbing] 12.5%. Best Buy’s market share in the category continues to expand, driven in part by the In-Home Advisor program, while it benefits from growth driven by new housing, renovations and families moving.”

Pachter notes the retailer now has two million subscribers for its Total Tech Support program, effectively replacing the Geek Squad, but he questions the sustainability of those programs, which costs $199 annually. “We think tech products will become easier to use in the future, not more complicated,” he writes. “We are not confident that consumers will continue to purchase the annual subscriptions.”

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