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Sales continue to shift to the web at Best Buy

November 24, 2014 04:56 PM
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Best Buy Co. Inc. in the third quarter of its 2015 fiscal year generated $601 million in sales on the web. Online sales accounted for 7.5% of $7.99 billion in total domestic revenue Best Buy generated in the quarter, up from 6.4% a year ago.

Executives cited web site and digital marketing improvements and the rollout of ship-from-store capabilities to all U.S. stores for helping grow web sales approximately 21.6% year over year. In an earnings call, CEO Hubert Joly said ship-from-store accounted for more than half the web sales growth.

Best Buy did not release a year-ago web sales number in its Q3 earnings statement, but last year reported web sales of $499 million. Using that number as base, Internet Retailer calculates web sales grew 20.4%. Best Buy did not immediately respond to an inquiry about the difference.

Joly said BestBuy.com’s average online order value increased year over year and that the site got more traffic, which he attributed to the retailer’s greater investments in online marketing. “We continued to shift marketing dollars away from TV and print to digital media and display campaigns including a successful traffic-generating back-to-school initiative,” he said.

Best Buy continues to invest in online advertising. The retailer led all top merchants in spending on paid search in the first three weeks of November, according to data released today by search marketing firm AdGooroo. Best Buy spent $9.8 million during that three-week period—including $7.2 million on image-rich Product Listing Ads on Google—way ahead of the No. 2 spender, Walmart.com, at $4.7 million.

He also said the click-through rates on Best Buy’s e-mail messages to consumers are improving. The retailer is using a database it dubbed Athena to increase its personalization capabilities.

Other improvements during the quarter included the addition of a Best Buy Outlet section to BestBuy.com; the company says online consumers can see more open-box inventory that’s available for purchase. The consumer electronics and appliance retailer says it also made the online checkout process faster and expanded the capabilities of its wish list feature.

For the three months ended Nov. 1, Best Buy reported:

  • Total revenue of $9.38 billion, an increase of 0.5% from $9.33 billion the same period a year ago.
  • Gross profit of $2.12 billion, or 22.6% of total revenue, down about 1.8% from $2.16 billion and 23.2% of total revenue a year ago.
  • Online sales of $601 million, up 20.4% from a year ago. Best Buy did not disclose today what online sales were a year ago, but it previously reported it had $499 million in web sales in its fiscal 2014 Q3.
  • Domestic revenue, which includes web sales, totaled $7.99 billion, up 2.3% from $7.81 billion a year ago.
  • International revenue totaled $1.39 billion, down 8.6% from $1.52 billion a year ago.
  • Domestic comparable-store sales were up 3.2%, an increase from 1.8% during Q3 last year. Best Buy includes web sales in its domestic comparable-store sales calculation.
  • International comparable-store sales were down 3.0%, a further decline from a 6.4% decline a year ago.
  • Net income of $107 million, up 98.1% from $54 million a year ago.

 For the nine months ended Nov.1, Best Buy reported:

  • Total revenue of $27.31 billion, a decrease of 2.3% from $27.94 billion a year ago.
  • Gross profit of $6.20 billion, or 22.7% of total revenue, down 8.4% from $6.77 billion and 24.2% of total revenue a year ago.
  • Net earnings of $714 million, up 198.7% from $239 million a year ago.

Best Buy is No. 15 in Internet Retailer’s Top 500 Guide.

 

 

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