Despite a mixed (and in some sectors, downright disastrous) holiday sales season for retailers in 2018, it would seem that Best Buy is still beating expectations.
Between watching most of its major competitors fold to Internet competition (remember Circuit City?) and the flattening of growth within much of the smartphone market as the popular instrument reaches peak market saturation, many in the finance world wonder just how much longer a place like Best Buy can continue to do business.
As it turns out, it might be a really long time.
Best Buy’s Efforts at Adaptation and Great Run of Luck
It could be said that Best Buy’s survival has been largely on a luck-based model, but those people would be completely ignoring the tightening on the warehousing and fulfillment end that has been going on behind the scenes at the electronics chain.
Not only has it been rooting out waste in every imaginable part of its supply chain, from finding more efficient ways to store TVs to utilizing smarter software that can more directly route orders to customers’ homes, it’s finding ways to value add to its product lines.
For example, if a customer goes to a Best Buy to look at smart security cameras, they can make arrangements for a smart home specialist to come out to their home and suggest other ways smart technology would come in handy. Customers can also book these appointments without going into the store, making them an even more convenient way to get to know smart home products.
Best Buy Credits Fortnite for Sales Boost
Best Buy CFO Corie Barry said the Fortnite Battle Royale video game by Epic Games Inc., boosted not only fourth quarter sales in 2018 for gaming consoles, PCs, and gaming headphones, but helped Best Buy deliver sales growth for all of 2018. In an interview with The Wall Street Journal Barry siad growth in areas such as gaming, wearables, appliances and smart home devices offset the weakening demand for mobile phones in the fourth quarter.
Best Buy: By The Numbers
Profit for Best Buy’s fourth quarter was $735 million ($2.69 a share), up from $364 million ($1.23 a share) the year prior, even though revenue was down 3.7 percent. Adjusted earnings topped analyst expectations of $2.57 at $2.72 per share in 2018. What’s in store for fiscal year 2020? The company says to expect modest growth of 0.5 to 2.5 percent and an adjusted earnings per share of $5.45 to $5.65 for the year.