Best Buy (BBY) reported revenue growth of 1.4% in fiscal 3Q17, which ended on October 29, 2016. It’s an improvement compared to revenue growth of 0.1% in fiscal 2Q17 and -1.3% in fiscal 1Q17. The growth in Best Buy’s fiscal 3Q17 revenue came despite product recalls related to the Samsung Note 7 (SSNLF). Best Buy delivered revenue of $8.9 billion in fiscal 3Q17. It exceeded analysts’ consensus estimate of $8.8 billion. Previously, Best Buy exceeded analysts’ revenue estimates in the first two quarters of fiscal 2017.
Revenue growth drivers in 3Q17
In fiscal 3Q17, Best Buy’s revenue growth of 1.4% was driven by revenue growth in its Domestic segment and International segment. The Domestic segment’s revenue growth of 1.3% to $8.2 billion in fiscal 3Q17 was driven by a 1.8% rise in same-store sales. Categories that performed well in the quarter included home theater, mobile phone, wearables, and connected home. The Domestic segment’s fiscal 3Q17 revenue was impacted negatively by the absence of revenue from the closure of 14 large formats and 23 Best Buy mobile stores.
The International segment’s revenue rose 3.3% to $753 million in fiscal 3Q17. It was driven by higher revenue in its businesses in Canada and Mexico. However, negative currency fluctuations continued to have a negative impact on the company’s performance. Currency headwinds impacted Best Buy’s overall revenue growth by 10 basis points in fiscal 3Q17.
Rival GameStop (GME) reported a 2.8% fall in its net sales in the same third quarter. The fall was caused by lower-than-expected demand for the video game category in October.
The fourth quarter is a very crucial quarter for retailers because of the holiday shopping season. Best Buy expects its overall revenue in fiscal 4Q17 to be $13.4 billion–$13.6 billion. It compares to revenue of $13.6 billion in fiscal 4Q16. The company expects product recalls related to the Samsung Note 7 and Samsung washing machines to have a negative impact on its fiscal 4Q17 revenue by $200 million.
Currently, analysts expect Best Buy’s revenue to fall ~0.1% in fiscal 4Q17. We’ll discuss Best Buy’s growth initiatives in the next part of this series.