Same-store sales in 2Q16
Best Buy (BBY) reported same-store sales growth of 3.8% in the second quarter, which ended August 1, 2016. This is the fourth straight quarter in which the company reported same-store sales growth. This growth was driven by higher sales in the large-screen televisions, major appliances, mobile phones, and health and fitness product categories.
Competitor GameStop (GME) reported same-store sales growth of 8.1% in 2Q16. Aaron’s (AAN) reported a 4.4% decline in its same-store sales for the comparable second quarter. Best Buy and GameStop together make up ~2.3% of the portfolio holdings in the SPDR S&P Retail ETF (XRT). Best Buy also accounts for 0.04% of the iShares MSCI ACWI ETF (ACWI).
Expanding product offerings
Best Buy’s same-store sales growth has been facilitated by the company’s merchandising initiatives. To leverage the continued growth in appliances, the company launched 35 of the 60 additional Pacific Kitchen & Home store-within-a-store planned for fiscal 2016. The Pacific Kitchen & Home store-within-a-store is now present in 152 of Best Buy’s stores.
For increasing store traffic in the home entertainment category, the company has planned the launch of 20 Magnolia Design Center stores-within-a-store. 2Q16 saw the opening of five of these stores, increasing the presence of this concept to 63 Best Buy stores. The company is also enhancing its Apple store-within-a-store, as we discuss in the next part of this series.
Compelling service offerings
Best Buy also believes in providing compelling service offerings to attract more consumers. In 3Q16, Best Buy will begin selling AppleCare (AAPL), which offers a range of service for Apple hardware, operating systems, and applications. In the 2Q16 conference call, Hubert Joly, Best Buy’s chairman and CEO (chief executive officer) stated that the company will introduce its capabilities as an Apple-authorized service provider through in-store pilots in 50 locations by this year’s holiday season.
Best Buy is also conducting classes to help customers make optimal use of their technology products. These classes and training sessions are offered in the company’s digital imaging hubs, in Samsung Experience Shops (SSNLF)(005930.KS), and in the company’s Windows Stores.
The next part of this series discusses the company’s efforts to strengthen its vendor relationships.