Best Buy FY 2Q17 Earnings Call Notes

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Best Buy’s (BBY) CEO Hubert Joly on Q2 2017 Results

Maybe our expectations were too low

“As it relates to compared to our expectations, maybe our expectations were too low. But the other thing is that frankly our team is executing extremely well. And what the brand’s consolidation has done is it has unlocked the ability of our teams to invest in the customer experience and great work for customers”

Back to school at expectations. VR not material this year.

“Back-to-school, back-to-college is performing according to our expectations and of course is reflected in our outlook. As it relates to virtual reality, I mean candidly, this is an exciting new technology. The impact this year is going to be not material on our performance. We through the assortment and the demo stations that I talked about, we certainly do expect to be a destination for this and to have excitement with our customers. From a financial standpoint, limited impact early in the cycle, limited product availability and so forth, but excitement from a customer and store standpoint because this is yet another example of a product that if you want to learn about it, experience it, even though it says virtual reality, the reality is that you need to experience it physically to be able to see that virtual reality, but this is true. ”

Online performance continues to be strong

“So thank you for your kind words. The performance of online continues to be strong. We think about online in two ways; one is the channel itself and then the other digital experience and how it helps customers because most of the visits on that site actually result in sales in the stores or visits to the stores and then completing the transaction online. So it’s quite intertwined. Projecting the percentage is going to be down the road of our business. It’s not something we have done. The – there is a way to think about it, which is there is growth online, which is clearly fast, but I think our stores have a very strong role to play. So this is – we don’t see it as a zero sum game. ”

Corie Barry

Revenue increased by 0.1%

“In our domestic segment, revenue increased a greater than expected 0.1% to $7.9 billion. This increase was primarily driven by comparable sales of 0.8%, which were partially offset by the loss of revenue from 12 large formats and 22 Best Buy mobile store closures since last year. ”

Price compression in 4K is not new

“Yes, the only thing that I would add is Dan as you well know price compression in 4K TV is not a new phenomenon. That is a phenomenon that’s been happening pretty strongly for the last eight quarters. And so to Hubert’s point, we continue to factor that in, but the excitement and the accessibility that that drives for our customers is very exciting to us.”