BBY - Earnings call transcript Q1 2018

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Best Buy's Q1 Fiscal Year 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session [Operator Instructions].

As a reminder, this call is being recorded for playback and will be available by approximately 11:00 a.m. today. Time Eastern [Operator Instructions]. conference Relations. of the to O'Brien, turn Mollie over President now Investor Vice will I ahead, go Please ma'am.

Mollie O'Brien

and morning Good thank you.

Corie Joining are me our and Hubert today CFO. Barry, Joly, our on Chairman and the call CEO

morning's will we A are why most release, these explanation website, measures. these earning directly today, call GAAP of in can the be both be measures, non-GAAP reconciliation to GAAP measures investors.bestbuy.com. financial available measures of financial is non-GAAP meaningful on discussing found non-GAAP comparable financial financial and the this which an During and our

of today could the within the company Some materially and for most cause the forward-looking Act may now considered undertakes that statements may call. on subject to Litigation the refer business reflect are differ from Securities such and financial make we of of investments risks are initiatives, meaning the performance These The and after earnings plans, uncertainties statements company will or actual address XX-K expected no current Please to the circumstances or will events this risks to of uncertainties. date arise these Reform turn any to revise Hubert. to recent I XXXX. company's forward-looking results Private condition, the statements. over update call to forward-looking of the and and more statements obligation release that our information growth

Hubert Joly

I with fiscal will call on Good our on quarterly morning, outlook. review I today progress Blue XXXX: Buy for results update in us. then Building our thank begin additional performance will our details joining implement and New XXXX and our as first an priorities provide to everyone, Corie for we then you the turn to continue strategy. our over of a Best quarter the against

broad performance non-GAAP last EPS product strength are up This categories. channels, The result factors. we on all a our strong compared line first of sales main comparable three $X.XX, to XX% the with growth year. diluted positive top which based, of today across of X.X% sales was Enterprise geographies reporting quarter of comparable and is is most So,

product innovation and proposition technology, of value customers. resonating confidence, in multiple consumer with our healthy Continued areas unique

positively and to we experience well, them and customers customer online, stores executing unique course our in are This their is responding experience. are continued to the in the We provide tied to investments of homes.

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continue make Now the we only also to had in significant implementation we of progress our a quarter strategy. strong first

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like technology a design have phones of day, already systems. discussed we and a alert Investor older the we medical products are seniors, space sold As variety and with our at Americans. exploring for designed on focus specially health-related We health products

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of target $XXX reductions established is XXXX annualized gross the completed and fiscal Our of current end XXXX. by optimization million additional profits productivity cost be in in to fiscal QX

During the bringing to achieved million $XXX cumulative in total goal. million first reductions $XX our we the quarter, annualized towards approximately

our and good. we but focus you the deliver good. to to element contributing various is with stakeholders Now Best value believe impact on to to XXXX not not also the this common their need talk that of businesses contribute to We about another positively to that often strategy our shareholders, Buy common

lives For excited jobs relying tech is prepare each about us, technology. we the through to X to enrich we've teams by year And year made commitment tied for our that help last purpose are underserved to particularly million XXXX.

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an summary, innovation technology are by driven we in that and customers help. So, to we opportunity operating environment rich for continue believe in need

market customers way providing love. We're tech We relationships. to what We we inspire what share and sell on purchases is are to that beyond customers needs to support customer how to the leader solutions want. to them the the deeper sell make unique and their focused evolve building on value our expand product and want opportunities that their them with do can and services technology grow solve technology working the for ongoing periodic real and we customer company sure with them they all provide

details support We And we our opportunities believe are growth to And by to like people, performance opportunity value CFO, and of we're technology to QX and fiscal call in investing our for more excited Barry supply on now momentum and this for the strategy. significant XXXX shareholders. the our guidance. to turn have our in I'd chain and Corie both our generate over continue

Corie Barry

Good morning everyone.

tablet our revenue than performance category exceeded which we would year, than them last $X.XX, The Before both driven delivered the occurred of segment. expectations categories The versus to international $X.X of the enterprise talk by per expected domestic quarter. I earnings most we with was in talk both I results shared the about largest share the primarily product better expectations. drivers. and home in computing last you billion, versus first like and about with expected quarter higher being our EPS non-GAAP of revenue theater, On

last with guidance. quarter X.X%. employees I were profit per the rate costs benefit gross sales higher both primarily and a Our on revenue the expense approximately results to rate our expectation. SG&A were first of higher variable effective calculation. to associated talk to increased points increased rate incremental provided increase our primarily lower add SG&A about field in with line and $X.X for our comparable to tax than dollars Enterprise revenue. incentive our earnings compensation due a would versus sales X.X% also due expected, few versus clarifying will now billion like our $X.XX share of I comparable year. A

are points more XX week, shifted are year following reported. to calendar comp basis match our computed sales the year week to were approximately aligned If than we week, we and not comparable be our X.X% adjust First, XX-week calendar like-for-like the on this last sales last closely year's year. to QX comparable higher fiscal would

Buy Best QX beginning XXXX excluded of a mobile this past X, result March these results sales all we our from March. stores, as announcement Second, comparable to domestic fiscal close stores our our

new fiscal timing The an flows. in revenue for quarter for revenue revenue that the adoption will of impact the had on had and XXXX, on Lastly, recognition cash QX impact recognition we presentation change net the earnings certain revenue the no and guidance company's and immaterial of adopted items.

X.X% a as by growth largest categories company of computing, of its revenue and sales XX% X.X% format smart a the values to points on perspective, of to conversion impact average EPS be adjusted Domestic home. increase net with a to been standard. Enterprise a billion. ongoing as has an comparable basis. segment, XX% $X.XX per The sales change. to by increase result benefit driven and count per increased new the expect percentage Buy year. across total versus being last higher This share or diluted comparable non-GAAP primarily by comparable our loss comparable the of closures. large from changes benefit in of From online incorporate share a to due on $X.X effective increased basis order increased a tax increase driven domestic This base tablets, online revenue primarily sales basis the $X.XX $X.XX XX.X% minor rate mobile of the We a $X.XX. was primarily $X.XX revenue revenue, Best from mobile In was increased and immaterial offset revenue store partially XX higher billion XX.X% from merchandising lower generated appliances, to a the presentation drivers share domestic XX most phones, and XXX

including Our online types the of factors sales reflects the products growth needs of and multiple customers.

since we the online For year, to example, the in first index data, quarter to and but Based lapped launches that last continue believe share we the SX. gain over Nintendo we our Switch online. the Samsung channel on

of stores. their to well XX.X% the continue and in large number positive incremental revenue $XXX comparable basis in points was channels international million. store over Mexico, with shopping customer customers growth of new and our orders online multiple by also XXX Mexico past driven currency This format both to as primarily in foreign increases increased openings We material six year. the in growth driven revenue pick associated up see choosing X.X% in In Canada sales approximately of segment, by our as to impact

phone have Turning now international margin by been The rate profit. these favorable XX rate basis basis due was to year. optimization settlement category. computing by million. one, domestic XX.X% proceeds rate approximately $X to rate profit the XX Canada gross XX.X% legal XX profit The points points current an and launch higher year-over-year pressures points gross primarily category mobile decrease a XXX model; million to settlement XX.X%, primarily category by partially approximately year the offsetting profit and the last of primarily and enterprise points rate Tech lower were recurring in offer the decreased and rates sales which or offset in in legal occurred driven Support versus phone XX.X%. to gross to basis Partially that profit profit basis prior approximately year. a Total initiatives the pressure in of in lower gross These million term settlement The in services legal due gross a of the pressure Canada's $X mobile profit of long decreased $X.X margin gross gross two, revenue categories. items services was The

statutory like year the lower I income with fiscal result compensation. negative full revenue expense million associated From last primarily first QX reform due rate from to $XX flow due a was a we increase revenue These to XX% XX.X% $X.XX tax rate versus SG&A of variable XX% tax our exchange turning in effective reduced to million specialty of $X.XX cash guidance. due U.S. revenue Now XX.X% depreciations. primarily increase The or SG&A of effective the cost was includes which a billion expectations. XXXX SG&A impact the the and by the of advertising increased reductions quarter year. was non-GAAP due and talk rate was or million about SG&A, tax partially corporate of $XX flow revenue or enterprise line would basis tax billion higher non-GAAP foreign ended increased to The higher basis, costs non-GAAP million which depreciation XX.X% increased billion International points $XXX was compensation. offset revenue versus were labor decreased $X.XX of non-GAAP XX was tax in year. or stock-based lower The million last or to with a last revenue but and higher and decreased last as rates investment $XXX now gross XX.X% expense. On to of to, or primarily versus $XXX reduction incentive year. through perspective, increases our expense, year. and Domestic XX.X% and

expectation well comparable in as QX business lapping continued in It also year. for reflects long-term the continued our as our Our sales momentum reflects strategy. guidance last strong investments

Our the $X.X $X.X X%. revenue X% growth to XX%. billion to billion. comparable to second the quarter of Comparable $X.XX range Non-GAAP sales X%. of International Enterprise to which X%. outlook an of following. XX% is growth of increase Domestic X% comparable of to to is diluted of X% in growth sales EPS $X.XX sales

shift I In the income note XX.X% of share Please shares. talking the a XX% to QX tax pleased is rollout because chain and domestic gross months. want some services basis strong Increased impacts. weighted the Our expected and costs sales segment, We're we non-GAAP assumes to XX as count profit recognize we discounts as members effective transportation supply XX related pressure while pressure. to average of to Tech rate XXX by year. as approximately gross first about the guidance. spend million in with following XXX add Support guidance our now estimated to of are add receive well approximately diluted the equally QX XX join higher and is year when national that benefit approximately our approximately revenue points. to the investments tend calendar the program, the full basis profit immediately Total over to points basis performance incur time comparable the costs start points they expected quarter The of of

updating time, XXXX the full the the At first year. has We we also year early start provided recognize represented year approximately is of fiscal XX% quarter this operating our guidance the of not historically income. annual our it at are and in

and basis. an capital to year non-GAAP XXXX full A which XXXX at comparable of up income non-GAAP totaling This operating of billion an XX%, in flat X.X%, of on guidance to is of $XXX the $X, rate increase Enterprise with diluted in sales fiscal income up to repurchases tax our XXXX FY XX% to approximately XX-week compared a X%, XX%. reminder, least rate EPS to $X.XX the a of approximately rate following; finally flat a share on X% Non-GAAP billion. to $X.X range to $XX Enterprise $XX billion, million is the fiscal As to range XX% XX-week revenue increase of represents $XXX basis. effective million of expenditures

assumptions additional As a like would in reminder, call are annual that guidance to out. I our there

basis specialty approximately offset related business, million increased Our ongoing to and pressures in chain higher in the the transportation points and as approximately of profit national investments gross in in revenue the efficiencies. costs for of expected partially quarter and basis expected profit supply capital reductions increased fiscal in second initiatives rate Support year. particular XX ongoing The the The returns cost including our rollout XX domestic by a quarters. but to by the depreciation $XX domestic pressure impact will well supply be to the of investment and share from labor, and is rate gross remainder Tech combination lower of Total are by largest investments profit as pressure new chain approximately to XX points, each strategic third

format to that We announced we on continue flat $XXX negatively operating Best small closures expect approximately to impact the million Buy with store mobile quarter by slightly revenue positive will last income. impacts

expense guidance as with our will incentive comp reflects align call expectations. annual to the our lower we over turn I XXXX for now fiscal our questions. performance operator the targets to reset Finally,

Operator

Thank you. [Operator Instructions].

question James. now from first will take We ahead. Dan Please go Wewer of our Raymond

Dan Wewer

Total Support How gross associated what is and margin year do with rate and the discuss on margin Thanks. evolving you comments operating a of the Total type also are operating could Report the see Tech Corie, your program that implications. up want the to rate? implications you profit if Tech in the for second about and follow expenses customer in

Corie Barry

Dan. thanks Yeah,

those years into lap we I out say. further here's and the in of years what some some usage, initial we look and see year what first to that in we second, out third, As like start out you of the program years,

take longer-term around nice purpose our step comments, our talking think and creating is customers. Hubert his and relationships here just about you more back I a did in customers one with If relationships job with our

it we for out in financial years, model our importantly get less financially with our into both of becomes so, customers us. more as terms but dilutive And those interaction

we deliver We've a remotely, the and fulfill cadre our on offer, testing right been our can like both have who deliver we have broad in of place terms now on of that. help while, agents we help help a ability nice far of on as Squad can actually can And to infrastructure Geek chat, you to In fulfillment who the that's infrastructure interaction to place this the deliver really, like and infrastructure that who phone. have offer that the already the in to we both the we have lot thus of of a lot customer of a hence really reason and ability combination in for place.

on As this is fundamentally the believe really the for business. right do thing time goes we to

Dan Wewer

And follow then inventory almost in quick the quarter, How the of year-over-year. you square per Inventories up. just a the as for growth year? playing see do the finished balance up foot out X%

Corie Barry

Yeah. inventory I our good situations. about feel very

and here. couple seen my have I've good things. say a of ever I'd our as have as big a kudos be who our demand planning inventory in found of inventory the history One, So, team to way to quality

in is very sales We stores. and telling our results us customer improved big that's have our is we've in absolutely seeing. that the out our we've built in consistently inventory in with of of risk so the have inventory history are drivers reflected less one online one frankly a both year-over-year been availability experience we had NPS And line figures that inventory customers where than ever Two, it much note. important

the quality been of business targeted we've also the seeing. and And support then about the so, the I in levels of inventory feel good very

much see that we'll it down our But proven sales for up inventory ratchet historically have we to very found customers. we even we think have the as up in have be I our that to years. advantage and make there sure we

Dan Wewer

you. Thank great. Okay

Corie Barry

you. Thank

Operator

ahead. Keith take Please go of from will We Jaffray. our now Peter next question Piper

Peter Keith

is good in plain you level to more Court a you Hey the versus know congrats there. picture and have I public the sales to look and with rolling sounds when curious tax, sense then It lift case Dakota like out guess morning had first if get tax-free at insight of on Amazon field. seeing question in state you for I I industry reference those of some And quarter. of big statements support states? purchases, as, what tax South now non-in was market have A to you've party sales you just environment. Wayfair thanks regarding solid today Hubert, you Supreme share a share amount of out, where you've a

Hubert Joly

the case establish So excited this Quill to of indeed, of to hopefully and take decision Supreme a Court yes, we about the and, plain level have revert very field.

In terms there the their business don't the they but it could be the They or on of part based been and maybe players significant where estimate to country of their country. including sales players on don't in general very party They precise the where don’t of collect of That across party first of course Wayfair first collecting very business. terms question, third-party their in has progress on several they there the in business tax understanding, lawsuits. Amazon marketplace business the on sales the to half online is is sales party first years today, other trying pure last this meaningful your our may across collects their tax. tax be sales not is imagine collect

is Amazon it first that's large third a and fight online. meaningful still market the share So, party given enjoy

In that not to several of $XXX, now business several thousands higher the X%, dollars, but going some $XXX are is customers $X,XXX let’s our like $X,XXX pay its something say average say our terms this, meaningful. part the than there's on around but it's of where an I tickets as of is or products mean can -- in maybe is on now impact other our most business purchases, business, categories, you in imagine, very

five last we the collecting start tax on the it helpful years was when incrementally. the in states so, to study sales studied And really business, first see

our incrementally say and on competitiveness as positive Now relied but not would to characterize never -- company, we would I move restore it. That's as as how a game a forward, a we've this positive. but changer, I way incrementally

Peter Keith

very luck. good you Thank much feedback the and Okay. for

Hubert Joly

Thank you.

Operator

Citi. Kate our take We'll of McShane next now from Please ahead. question go

Kate McShane

question. of and my in Corie, could calendar you're remind level gaining taking have second Hi. going if I Thank was why shift to us that what is you quarter. impact the for you wondering the

Corie Barry

Yeah.

here. to So, trying calendar we shift the clear can are on as get we

So, May, in is we that in when adjust What adjust, May, year's this we last the in second comp a it quarter out same week we the first year keep week does base. takes and week heavier in, heading in a to week those much it to first August, football weeks weeks. tend They are school brings the and to in August weeks. weeks be back August, and in

the you May and it up we Kate? it August week. of week in week down the with half, sense thought effect apples make this QX So, because that to you heavier school to so was QX. that back lot XX the Does put XX out range. apples, much the the you the week that becomes pre-back basis shift back you comp it, largest then is where a more important point minimal head pick to But transparent extra of shift be is as takes it quarter one you into the of of in base go when for the lighter that out to and to

Kate McShane

quarter, QX? saw to we follow-up this a your compared with higher upside should that a as than in drive how That's the you. plan to comp then versus question just comp how helpful. about regards you it guided Yes. Thank the and to could And parameters think what your

Corie Barry

Yeah.

So, things in few we a thought QX, happen.

heard in it remarks. plan, internal our prepared think our of I terms you In

nice versus holiday. materially which plans, had expected, of a was expected. internal better saw was outcome almost because we out was strength Our even this incentive our category, really in than every we all coming again, of And higher comp than that's

In into QX. upside terms of potential

thing back. those within step let pretty as a positioned continue did see think QX we see me to said prepared some good health remarks, very we overall then we we're more because we’ve saw you I health that take much One to it's health, in like pertinent in two how industry So, we industry and the consumer see continue things. and

for good, saw categories, XX% thought up in we interest we But what even that have. reflects a only NPD And of so, technology. roughly X.X%, healthy our about we NPD because again,

could continue that better things few to a there's than QX, perform see into head we we as right So, now.

hit strength the cleanly, a to more continue TVs. model of think very new I depending see how theater on got out new set transition you If In-Home even beautiful came we've we is

could a potentially there. more You bit see strength

of terms was in We pens things categories had the are our a and lot strong. the came tablets one that the of list these to do with new of in categories tablets. some of some and of We with that expecting line saw refresh that of

might see upside the to expecting there. aren't strong to pace demand we've seeing, continue but be We if at that we some that been that quite continues very

reasonable lapping So, felt could and very a few last think what both we is was we're us like rise I in a the to year continue like given of QX like QX we so the guide. there but front see what the we felt

Operator

question We'll from now take our next Barclays. Please ahead. Matt of go McClintock

Matt McClintock

be strength well your seeing been sustainable in could industry, typical remarks, and said how historical be the what product business guys. to us question to Hi good of last everyone. a take we whether Hubert, question. in has this that morning like Thanks. actually was my innovation today today specific innovation product Actually, Can the in off prepared one that times seeing tablets longer try to first think to think views kind past extrapolate would cycle your and strong it I you've kind or about the was the trying That's beyond your term. historical longer et multiple product answer term for and to broad-based in areas. category And compare and you it just I when the your cetera. industry televisions business. of give are strength on of you the

Hubert Joly

Yeah Matt. thank you

improve and to of about a helping help people lot is appliances. more around are and had spoken this health call the now large things there things for in healthcare people we've And is Day home how broader their connected, can and so the as for about internet how One about people this applications. reduce, the the people in and we I future is that and of of cases excitement gets with wellness technology small at and technology consistently. this longer. at more that do what's Investor is talked embedded of these reduce then about magnitude talked unique stay are bulbs, products exciting The think impressed of penetration cost What use we just have the pace course, doorbells, beginning country. devices this these all light continue the and And era. beginning. just and of thing is technology of the and era be this forth are breadth I by into innovation. and broader And appliances, now how

think only continue And always tricky. -- so, I to -- in is we with the in cycle we're want is share thing about the I can there I the and a that and what to ways talk what company cycle broaden. is future you as the we I the believe a we'll are deepen believe think predicting that I for

have we so, environment. And this I think positive

because the reasons about of of it an we've One rich is talked this. opportunity environment

even our our that share hardware across on of though our is XX%. wallets customers in categories existing we only of is [XX%] all going is leader of just reason other market share The to are a be

us So, for all company. to significant the this sustain gives growth multiple the really drivers time

Matt McClintock

explanation Corie you of that really a this they evolution because we're Thanks the kind I the channel you're stages less where mortar wondering, as just we of so just and of the is need just stage then trend? and for taking technology are consumers they familiar the did at for explaining share brick the and for type that of business to need service, that job store. color. customer the with seeing relative some to earlier and follow are why at gains up of a this even Is the good in go was that And channel, growth product strength today, seeing rate. online of potentially into reduced related. online

Corie Barry

I try price decisions, final will points to a into when do and Hubert separate a make particularly that we're pieces. technologies. believe consumers the touch, need mentioned this amongst earlier feel, I One, couple fundamentally is So, the that there to talking about

switch need there. believe I that, there's into to So, the going all the don't to stores. I imply want suddenly businesses think, I do a

in to there to it's separately individually play have might channels I that. about things channel. our we're it saw don't the where talking I interplay exceptionally that get continue to doesn't I us, in, in we change see want, customer point it multiple the lap be whole fundamentally just channel don't mean, me, a one, teed that some but that know these this customers and data the the in very as customers and between some and say view things up, emphasize we their us my material fundamental I was that only amongst and I one channels, to what a I belief of moved gets is think, are think more channels imply And world It people us but to think do. fulfillment which are trying the there all perfectly shop true, the the do your about mean is with and just to products good that shifting, them Hubert of talked to I and but we even had shows and to I available is way our overused, think in on channels. of whole, they is not growth have much in-store in pickups, like want is, you remarks our we through I want see isolating we literally online it customers continues touch options shops one increases hard all who fact specific the about but availability, only ton

Hubert Joly

things multiple the customer ability and these to I product products touch really Across thing categories, integrate to have plays have add customers. stores their have help, and we the and points gives them to well unique technology and that continuous across across ecosystems a The the ecosystems would our innovation, needs online categories in touch very two and for and to product points competitive the then back to other us need is product home that, these getting ability advantages. the in across

about and hear can course you the that we why feel you see the the have. excitement and momentum that's So have opportunities we of

Matt McClintock

Thanks Best that. for luck. of

Hubert Joly

Thank you.

Operator

from We'll next take Please now ahead. question Mike of Bank. Deutsche Baker go our

Mike Baker

to thanks. ask I questions could. two Hi, if I'm going

your guidance. in increasing really in I year not the the but, guess last I you increase can happen, it's year, first and the believe guidance, First, quarter a lot did

here early anything it's the quarter just that read except there's in in guidance more the or the wondering to year. earlier if increasing So, I'm into not

Corie Barry

and we right even front we wider we more at that to believe the just last I last loud it year one so this this not know end now Genuinely year, than is of much did that's there's gave is like we year, trending towards higher our gave we we're only range was in the into. it of there specifically felt What say would its read I us range of still XX%. out range did wide year. and a thing revenue we year much

of headed the rest ourselves year like as we year head given, give we're through but of plenty of And just kind we to where right now, want is the room of left. there much so, we how

Mike Baker

Yeah.

perfect makes that sense. Okay,

three the are investment that eventually I start guess getting spending some of higher advisors of spend. about what in you're at Can comp. versus catch in where presumably and to up pay, for in of services things. on order the sort investments between the still revenues just is the magnitude you give Advisors, upfront things question, costs, leverage mode And us and you're I'm like associate where to incentive talked Second we you phase In-Home In-Home hopefully

Corie Barry

Yeah.

the put order be those in to we clear of things So, size.

investments largest, Advisors year the In-Home scale the smallest last then comp into relatively the are, actually of the those the the of and we full holiday. being back incentive where we next holiday investments and the So, year-over-year. before piece of in variables the just terms three launched and being in heading half drivers remember

time to enrolled question since more continued to have educated, also their now then, with right up grow quarter ramp and more program have skill We XXX bit that a little your They ramp Advisors. exactly base. ended as become they about we In-Home up the performance

new And is still we're ramping on absolutely seeing training, productivity little a their people overtime. so, of we're mismatch a bringing investing, you're bit between and we're

they to confidence that And their we ramp. going see book continue continue add we so, as and business, gain to still In-Home to as Advisors this I program think year throughout build more of are

Mike Baker

Okay. turn I'll Thanks for the it someone else. over to color

Corie Barry

you. Thank

Operator

next from question We'll take our with Anthony Please ahead. Markets. Loop Capital go Chukumba

Anthony Chukumba

have morning. Good questions. two I

like in So, in question the time when the doesn't first go the a far. back that comp first model up X.X% the growth My you've is just store put sales that comp the quarter, last quarter. first

Corie Barry

a say long a moving it We're compare not it's over We're it's but focused I been, how was on to long It time. could XX going forward long Anthony. time to just ago. years.

Anthony Chukumba

Fair enough. Got I'll and back guess I at it. go looking microfiche.

question so business. the services Second

that. trying second services in And row touched figure to a But the advisors I you X% comp sort business. this XXX I So, just in out point. you've this only Support. a Total up know before. rolled we've what's of the a is just in you Tech driving bit that guess quarter I'm in-home have on done at little this Because

seeing is the that we're exactly So, figure growth trying there? out to driving I'm just what

Hubert Joly

you Anthony. thank Yeah

and So, to new not the does warranties, Advisors of In-Home installation by scope here. the right so In-Home Advisors be the material Support because slide way free. support is you're are is Tech services. include extended What includes the visits Total not And clear it it's the

of our a in we are our the of course, And the online to solutions lot second, is the not done just also growth have the last job positioning several of general, over it product our setting attached. services. Because good business think is of of related quarters, I that's the the that and hardware I teams of driver. but course And products more growth then increasingly so first selling think an business. the

standpoint. So, and been we're rates go from that seeing attach up selectively helpful it's

this Support. Total launching as it's and company by direction really focus the oh services is the that we're of because to see focus the identity. core is and Corie extra of to a a Support I'm we Tech move becoming of But things to brand you. course core Total Now different excited the way the some of that's is increasingly recognition thought, in about not, I element It's positioning the Tech that need of brand forward. our described, one way, as apparent you'll revenue This sell we move not an

now to be drive overall with is So relationship, strategy clear, to of not relationship revenue, services it's to principally customers. our the a the focus build

we So, to our of x us not you've forward, services be going percent as heard move say, the revenue total is revenue.

of component services bigger services a as not and a the is or goal. over relationship goal with to broaden customers P&L this a a is in as So, we The not relationship way and time revenue use a may driver, of itself. it's a

Corie Barry

we services, more Often I clarifier. itself. sold included things. clear, more may you of sells in-home and don't more, one associated side things. product revenue side that the in-home In-Home in a it in of isn't characterize this, to just are I'm Anthony, with as advisor to the clear, know want by products is what just normal that saying be I the advisors just services drive Advisors sale, of on make but weren't I but There sure just want

Anthony Chukumba

very That's helpful. good Thanks up guys. it. Keep work. the Got

Hubert Joly

Thank you.

Operator

next Gutman go question our of ahead. Please take We’ll from Simeon Morgan Stanley.

Simean Gutman

flow are promising places in rose, was mentioned context I Thanks. just margins, but focus flow trying planned, buckets much about time, you're can to through. that investing so up about there's of Good investments, $XXX and anywhere, the probably up are you've you EBIT spent think on in as many thinking over continuum to so just the to million, through think like you quarter. Corie that just and and in past incremental U.S. margin, on. nice performing I upside ratably. where the speed this you I I about the But you where in about morning the are not not everyone, want investing margin it being wanted talk Is sales it $X were million, business think

Corie Barry

Yeah.

them that people side how were and be So, -- on expected roughly to on the on hit we capital we investments paced the side. we the paced, both

investment by we a guided was really our how as we've offset of quite was little what profile which bit the expected year-over-year for a with evolving And would profit so line guided, talked some had with and drain time it meaning, had economics little and gross had mobile, around than had in a and a about cost guided pressure characterize fact much some that we somewhat we we reduction. less there which some had even rate what bit was for of the better of this in to also I very do of

out, it's proud and some this to that in rate think for can rapid prior done the some year years, feel physical XX a journey these ramp the Support. about the some over get We basis. continuing In-Home we of that make we've like have year than in the of to I'm frankly the is more stores Tech of a running than we up faster work the which build on ramped I technology important even so in to start is the up relatively We're talked weeks historically. the things laid like a QX going even we who continue early Advisors and the year in some on exceptionally ratably investments teams way and flattish, Total of

not like we're decisions. right we're we're we feel in the if think way the things, to and returning with some should going we what think returns then different they're trust we’re expect they we that monitoring investing like me, feel make right on and we I So, be, pace the would

Simean Gutman

the can for for you ASP, the staying I accelerating performing that's I if if that, increasing how ASP Can share with it's disclose TV then us us you with decelerating if story. can follow And you you up an are share and just can or category, been that's, on think units same?

Corie Barry

broadly in than TVs we had we better expected. so performance Yeah,

see theme is similar ASPs which continue us for We a continue to to increase.

our of the better the We projections. like internal I in bit a we've little for but unit said category. QX, positioning we so, And decelerate us like saw than even growth

industry we cleanly the like had maybe a we transitioned bit little industry I down of make a things bit. versus because that new excited noise just very is the little roughly industry numbers with again, QX. funky. We in we've think into we have were XXrd like like the lines But think there the the so, versus we week that And we're the lines and into the positioning, flattish

Simean Gutman

Okay. Thank you.

Operator

our go of Schick Research. David ahead, take Consumer now We sir. Edge question Please next from

David Schick

good my and taking thanks Hi morning for question.

going? Just wanted mobile recapture closing. customers math you Buy the the is How Best you any -- in you you math, that in the of on them Are through would rate some to you walk stores the that than different are Thank losing store, how expect. seeing losing -- are lose are that them those back many you.

Corie Barry

Yeah.

very in So, early closing stores. all obviously these it's

stores seeing what early it's So, have broadly what this closing obviously you're We bit a to closure little the is. on size comment of been some overtime.

early that we're far, turning seeing have anything not relatively or so than a for I based said very including would that rates still in recapture Based have we give on us so, on deal And expectations way like this those a it's good stores. is will But of out these we that. kind different worry expected. pause

David Schick

you. very Got much. Thanks

Hubert Joly

David. you, Thank

Operator

from ahead. Nagel question Oppenheimer. We'll take Brian our next of Please go

Brian Nagel

for taking Hi good morning. Thanks question. my

Hubert Joly

Good morning Brian.

Brian Nagel

My bigger question perspective. picture a first is from

there pick well. now retail up outsized your really number initiatives at of also, where across consecutive as has have a been two growth. sales happening solid clearly as seen up Best Buy. internal But of put You It's quarters sales you

you of your is from seeing what So, true now at know we're more the actual have I an grow demand to after you well. a could of question customers look prove perspective as versus demand up maybe data, sustainable. that a period spending right your potentially catch subdued more industry How much

Hubert Joly

questions. you thank two the for Yeah highlighting last

For X%. environment doubt consumer right, a many minute, would the seeing like quarters no many, numbers I is to comps about across And There you're we're four the better. last is address strong that retailers.

combination, retailers higher really have say. that consumer better. our I numbers most so would feeling think course, is a than I In our probably the are you it's case, Of

the have And driving helpful. it's technology innovation to a recovery is are market And continuing housing us. continued You gain share. of course, that’s

will driving current engines three if have you be we our So, growth.

it if of of an have the But going engines. Now other course that's down, two doesn't impact impact. the engines one to slows

Because of know at combination So second now What it's fraction the and the is Corie of the a of the highlighted NPD is X is the that is first do, went first the know. we the on is what percentage and one so days and breakdown. where but Again, the we factors is we to what to the hard helping, material. first no the the X.X%. combination NPD two, know is hard all first doubt, there what negative, remember two between

Brian Nagel

you, helpful. helpful. That's that’s Thank Okay.

The balance year, maybe see so the last what this some second on of think the your shorter to in how question, it’s ways versus XXXX, innovations the we’ve a With regards we it’s category, think one. season, the that year non-core TV follow prior category a for of the should years. early in sales to it's in the about couple a holiday just bit But I last as TV, question, but obviously driver seen of we’ll potential a off. here

Corie Barry

a phase is of talked where a evolution we've and the the about definitely we mean, actually think I lot idea is space it a where and this I innovation get continued which started know, and you cycle that. what it's creeping into question a behind like actually up something that I it lot more you're is is, asking, XK, with think turning instead

or horizon. on technologies, XK see technologies can OLED around, the QLED, You HDR

us horizon, this TV highlight the important for evolution and continue still is I and the of in technologies the horizon way, to the going time it's we think to be new technologies. by so case but far think over I to why that on it's think those the

is The are TV still would people lot not to also about There a second still it size. it's of want I about experience. piece is have just that a larger who say technology,

a their in that to And I of really lot a having homes. people TV the it of more frankly combination so for think technologies, lot also runway both money but creates their cool just for experience two,

Brian Nagel

Thank you and congratulations on a nice quarter.

Hubert Joly

you, Thank Brian.

Operator

question now take Research. from our go Wolfe ahead. of will Mushkin Scott We final Please

Scott Mushkin

hate answered call quarter why to I was great. try to flow did to it back I it the trying a go really just be was focused, term critical and -- lot answer. my I or had much comp, want X% through it flow the so profitability, the just with on guess been through. been it seems trying be just overly been I'm like touched guys, the and would short so, that Hey have understood I to wasn't here, I have to of more make why but as And Simean something to honestly. the have understand understand questions but -- not I'm maybe thought would there sure I

Corie Barry

Yeah.

through as QX for of On it starting me sides that as we one year. side, investment year, priorities. relates SG&A, year the because want to starting early that we're to invest especially it the out go strategic our in ramp let to the So, try going we kind we we guide were QX The to to this. we the even we're say in gave for of out lay would continue loud against two said

that of we assumed And excellent continuing mobile and to gross and case function that knew be would the making that's in would pressure but we are are we not of said some phasing model, even profit year, things, going profit there the The margin, space to pressure change even front we gross the earlier we so excuse of investments side comp, investments work they continuing be of comp, seven for bit seven out we me the knew optimization the both in on talked and the pull in we on us the of teams year, a have the much something as we the the haven't gross continued that's variability SG&A. in we our flows that about profit, again, to --- comp top came this of the of up we that had that. a said you're big forecast it's volume, in mix SG&A and And on then the of there really cost initiatives, quarter. of is business side, kind compensation and that pressure about of then some seen we so, level do that knew couple in was doing. on evolution a like would be talked a things The more through incentive that this with of and a of

is therefore, And a so, from except situation. tough for of our line I internal share have not in the we for than most performance this a actually wonderful employees, we would with bad perspective, to with just were mean quarter lot that better had what I because expected we our think it's expected. And got opportunities things

Hubert Joly

from them to able a in a investments our what situation would standpoint. we're add make that is profitability -- able the drag that's And of leaving that And in there to top-line, we are say of a the was we're we're making. because I are offset Yeah. who not I the one that this to seeing going significant things different margin, drive drag our is others is

profitability, the trying Investor we're we to discussed we're trying the Day really with line have -- what for like pushing not in so, a of which at differentiation the in the have greater position growth. There space is be to transformation continue winners company the winners position We're the to is greater going the that return for increase there this the outsized. to to the And is company is future. for between Because losers. because pushing future, key we it's company other the the and and we believe

what so, there company And the stepping your pleased to offset forward. as not be we do. grow back And to to invest strategically earnings. fundamentally are pleased the trying a created investments. course to to value thinking continuing to of of time to We're we're able is minimize move we but to we're increase the as we question creation is the and believe significant is this lot and There be able opportunity shareholders

appreciation and close lives So, my talent watch to enrich of leadership are and going I for the because able of every the results associates who who of briefly technology their many be and delivering company, and and and you time immense for of attention customers the reiterate company very all the gratitude to We am with customers. these helping admiration day. you thank our exists and your the at all are that all

Have your So, support appreciate day. Thank you. a as well. great

Operator

call. Thank you today's your concludes for This participation.

disconnect. may now You

Best Buy (BBY) 24 May 182018 Q1 Earnings call transcript