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Best Buy Co. Inc. reported domestic online sales declined 9.3% in the third quarter of its fiscal 2024 ended Oct. 28.
Online sales made up 30.6% of total domestic revenue, compared to 31.0% in the year-ago period. Total domestic revenue also declined, although slightly less than online revenue. It decreased 8.2% to $9.0 billion, driven by a 7.3% decline in comparable sales, Best Buy said.
“Today, we are reporting better-than-expected profitability on slightly softer-than-expected revenue for the third quarter,” CEO Corrie Barry said in a written statement.
The retailer lowered its expectations for the rest of the year. Best Buy is looking toward holiday sales to beef up Q4 sales.
“We are excited for the important holiday season and are prepared for a customer who is very deal-focused with promotions and deals for all budgets, new shopping experiences, an expanded product assortment, and fast and free fulfillment,” Barry said.
Earlier this year, Barry said that 2023 would likely be a low point in demand for tech products, and the industry will stabilize somewhat in 2024.
Best Buy ranks No. 7 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers.
Nearly half (43%) of Best Buy’s online sales are picked up by customers in stores, the retailer said. Customers remain willing to shop through multiple channels, including Best Buy’s app. The retailer recently launched Best Buy Drops, giving customers access to limited edition products and new releases exclusively through its app.
“We are encouraged by the early results, as Best Buy Drops is driving both incremental customer app downloads and higher frequency of app visits,” Barry told investors in an earnings call.
Best Buy also began to experiment with live shopping in the quarter. The consumer electronics retailer teamed up with live shopping platform Talk Shop Live to sell new products. The retailer did not share results of the test.
Computing and mobile phones, consumer electronics, and appliance sales all declined year over year in the quarter. Meanwhile, entertainment and services sales grew. Entertainment grew far more than any other category, up 20.6% over last year. However, the category still makes up up just 6% of total sales.
Computing and mobile phones remained the biggest category, accounting for 44% of sales, down 8.3% year over year. Consumer electronics made up another 29% of revenue, down 9.5%. Appliances recorded the largest sales decline, 15.1%.
Best Buy expects TV and gaming sales to continue growing in Q4 and in 2024.
Best Buy is suffering from several larger economic factors, says Neil Saunders, managing director of Global Data retail analysis firm. Consumers don’t have the disposable income to spend on new electronics, and a weak housing market dampens demand for appliances, he says.
“The purchase cycle for electronics was knocked out of kilter during the pandemic as people pulled forward purchases. We agree with management’s view that this will lead to a natural pickup in demand at some point in the future, but we are more cautious about the timing,” Saunders says.
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