Best Buy (BBY) has exceeded analysts’ revenue expectations in eight of the past ten quarters. The company’s revenue rose 6.8% and 4.9% in the fiscal first and second quarters of 2019, which ended on May 5 and August 4, respectively. These growth rates show marked improvements compared to the 1.0% and 4.8% revenue growth the company saw in the first and second quarters of fiscal 2018.
Best Buy’s growth initiatives are helping it deliver improved performances across several categories. However, the deceleration in the company’s online revenue growth has disappointed its investors. Best Buy’s Domestic segment generated a 10.1% rise in comparable online sales in the second quarter of fiscal 2019 compared to the 31.2% growth it generated in the second quarter of fiscal 2018. According to the company, the slowdown reflects the fact that consumer electronics is a mature online category compared to other product categories.
Best Buy’s previous strategic program, Renew Blue, focused on improving its same-store sales and operating margin. Its current strategic program, Best Buy 2020, aims to enhance its services business and capture growth opportunities in categories such as smart homes.
Best Buy is also focusing on addressing the technology needs in the health and wellness space, especially those of the aging population. The company’s Assured Living service helps customers use smart home technology to remotely monitor the health and well-being of the elderly.
In August, Best Buy announced its intention to acquire GreatCall for $800 million. GreatCall offers a range of products, including mobiles, connected devices, and services, which are tailored to meet the requirements of the aging population.
In the second quarter of fiscal 2019, Best Buy rolled out its Total Tech Support program on a national level. For an annual fee of $199, Total Tech Support members are offered unlimited Geek Squad support irrespective of where they purchased a product. Best Buy has also collaborated with Amazon (AMZN) to offer Fire TV Edition smart TVs. These smart TVs will be sold only in Best Buy stores and on bestbuy.com as well as on Amazon through Best Buy as a third-party seller.
Analysts expect Best Buy’s fiscal 2019 third-quarter revenue to rise 2.5%. The company’s revenue for the fourth quarter of fiscal 2019 is expected to fall 4.4%, reflecting a comparison with a strong holiday season in the fourth quarter of fiscal 2018. We’ll discuss expectations for the company’s fiscal 2019 revenue later in this series.