Online sales at Best Buy grew 22% in the second quarter to $581 million, but that wasn’t enough to offset weak sales and traffic trends at physical stores or prevent the company from forecasting similar declines in the third and fourth quarters.
Sales at Best Buy’s U.S. stores declined 2.4% to slightly less than $7.6 billion and same store sales declined 2%. The company’s total revenues also declined to slightly less than $8.9 billion from $9.3 billion. The company said its adjusted earnings per share increased to 44 cents from 32 cents thanks to expense reduction initiatives in the face of industry wide weak demand for many consumer electronics categories.
“Like other retailers and as reflected in this quarter’s performance, we continued to see a shift in consumer behavior. Consumers are increasingly researching and buying online,” said Best Buy president and CEO Hubert Joly. “As a result, traffic to our brick and mortar stores continued to decline, yet our in-store conversion and online traffic continued to increase due to the execution of our Renew Blue strategy which is in direct alignment with this shift.”
Best Buy’s “Renew Blue” strategy is focused on fundamental aspects of retailing such as online sales growth, an enhanced in-store experience and leverage of omnichannel capabilities. The company said it made progress against the strategy in the second quarter citing improvements in its Net Promoter Score, new merchandising initiatives from Samsung and Sony and the chainwide rollout of ship-from-store capabilities which contributed to 22% online same store sales growth.
“Looking ahead, our goal is to continue to create a differentiated multi-channel customer experience such that every interaction customers have with us, regardless of channel, makes them a promoter of the Best Buy brand. In support of this, we will be intensifying our investments in customer-facing initiatives across both channels in the back half of the year.”
Despite the digital progress and commitment to invest, Best Buy is bucking industry headwinds related to the product cycle and said it lacks visibility into inventory quantities of new products, a reference that seemed aimed at Apple’s highly anticipated iPhone 6. As a result, the company has forecast its third and fourth quarter sales are likely to decline in the low single digits.