Best Buy 2Q14 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Consumers increasingly buying online

“Consumers are increasingly researching and buying online. As a result traffic to our brick and mortar stores continue to decline and yet our in-store conversion and online traffic continue to increase”

Top reason for missed sales is that item out of stock

“In our consumer surveys one of the top reasons customers say that they do not buy when they are in a Best Buy store is that the product they are looking for is not in stock in that store at that time.”

Expecting continued decline in comps–ongoing softness in mobile phone category

“Now looking forward to the back half, as Hubert remarked earlier, industry wide sales are continuing to decline in many of the consumer electronics categories in which we compete. We’re also seeing ongoing softness in the mobile phone category ahead of highly anticipated new product launches. Therefore absent any changes in these declining industry trends and with limited visibility to new product launch quantities. We continue to expect comparable sales to decline in the low single digits in both the third and fourth quarter.’

We think the consumer is fragile

“We have a backdrop of a consumer environment that’s a bit fragile.”

We have to be agnostic to online vs. in store

“The mindset of the company as we see no reason why our online market share, or market share online should be lower than in the stores and we are determined to be agnostic from a channel standpoint and a profitability standpoint so as to be able to serve the customers the way they want to buy it.”

Mobile is highly penetrated

“in mobile, everybody is talking and accepting new products in the back half but the penetration of smartphones in the country has really reached very high level”

Back to school has been good

“I would say that back-to-school so far is in-line with our expectations. There is potentially I think in retail in general, a more positive environment but we’re not just going to take a couple or three weeks as a source of excitement. This is an economy in general in a sector where there is lot of volatility week to week and month to month depending on this, this and that. So but yes in general there is a sense that the retail environment in the last few weeks have been better and certainly the beginning of the quarter has been in-line with our expectations.”

Excited about UltraHD TVs

“What’s very exciting about Ultra-High Definition TV compared to 3D a few years ago is that the customer benefits is immediately tangible and meaningful in the form of improved image quality”