Best Buy FY 1Q17 Earnings Call Notes

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Best Buy (BBY) Hubert Joly on Q1 2017 Results

Delivered better than expected flat comps

“In our domestic business, we delivered better-than expected, essentially flat comparable sales, versus our guidance of 1% to 2% decline. Contributing to these better-than expected results was the strong performance in our online channel which grew 24% in the quarter; and similar to last quarter’s trends, from a merchandizing perspective, we saw strong year-over-year sales growth in health and wearables, home theater and appliances, offset by continued softness in mobile phones and tablets.”

Q1 represents less than 15% of full year earnings

“Although we are reporting better-than expected results today, we are not raising our full year outlook as the first quarter represents less than 15% of full year earnings and at this stage, we have no new material information as it relates to product launches throughout the year.”

The wireless industry market is obviously soft

“Yes, good morning, Matt. The wireless industry market and there is some public information around this, has continued to be quite soft in the quarter as we anniversary a more iconic launch the previous year. So it’s continued to be soft and we continue to believe that significant launches in the back half of the year can revert the trends. So really, very consistent pattern compared to the previous quarter”

Computing was better and phones were softer

“In the quarter, I think, compared to our expectations, computing was better. No doubt about this. Again the results of our partnerships with the key vendors and great customer experience across all of the touch points, computing was better and phones was softer.”

VR revenue impact will be very small at this point

“Yes, virtual reality is a very exciting technology. I bet you all have seen that we were the exclusive place where you could try the Oculus in our stores. So a lot of excitement there. The impact on the business this year is going to be very marginal. So, I think exciting from a consumer NPR standpoint, very small at this point from a revenue standpoint.”

Sharon McCollam

Online revenue now 10% of total

“Domestic comparable online revenue increased 23.9% to $832 million, primarily due to higher conversion rate and increased traffic. As a percentage of total Domestic revenue, online revenue increased 210 basis points to 10.6% versus 8.5% last year.”