Stores like Walmart and Target may have taken their lumps during the holidays, but Best Buy didn’t. The retailer just posted better-than-expected sales for the fourth quarter, powered by a 19% advance in online sales. Consumers were especially gung-ho about headphones, computing, appliances, mobile phones and tablets, while sales in the gaming category declined.
Overall revenues for the Minneapolis-based retailer climbed to $15.2 billion, up from $14.8 billion in the comparable period. And comparable sales rose 3.2%, its 12th straight quarter of those improvements.
Net earnings rose 1.4% from $735 million to $745 million.
Observers say the solid numbers are evidence that retailers with the right strategy have what it takes to fend off Amazon.
“Best Buy offers more proof that consumers were not asleep during the holiday period,” writes Neil Saunders, managing director of GlobalData Retail, in his note on the quarterly earnings.
He says the company also benefited from the compressed holiday period, which gave people fewer days to get their shopping done. “To maximize efficiency, many opted to shop online or to use services such as [buy online,] collect from store. This played right into Best Buy’s hands, mostly because the firm excels at both online and multichannel retail,” he says.
For the year ahead, Best Buy expects comparable-sales growth in the range of flat to 2% and says it is continuing to invest in enhanced employee and customer experiences.
Separately, the retailer is getting pushback from some of its employees over a controversial lease-to-own program, which they say preys on financially vulnerable customers. A report in The Washington Post calculates the arrangement often results in customers paying up to 2.09 times the original price.
The Post quotes a former assistant store manager: “It feels abusive and gross. You look at the terms and we are charging more than $2,000 for a $1,000 product."<