BBY - Earnings call transcript Q3 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by and welcome to Best Buy's Q3 Fiscal Year 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.

As a reminder, this call is being recorded for playback and will be available by approximately 11:00 AM Eastern Time today. I'll now turn the conference call over to Mollie O'Brien, Vice President, Investor Relations. ahead. go please Mollie,

Mollie O'Brien

thank and you. morning, Good

uncertainties considered comparisons, considered substitute facilitate but the Joining both with of are non-GAAP in issued can earning these our to morning's this These are this the contain be to, for an most for Joly, events. of superior morning. impact and financial are the Today's conference measures financial today and me conference available be comparable press conjunction CEO; year-over-year call found provided we which must financial This non-GAAP in on the to Chairman reconciliation the CFO. directly and GAAP and Hubert our not explanation in measures these GAAP certain should measures the of forward-looking Investors with exclude be meaning company more and operations, or within call website, are section These measures measures meaningful XXXX. release, morning's Hubert. business useful Corie undertakes statements the revise to to as release is release conjunction these non-GAAP could period. and may financial in the will A and forward-looking why release should non-GAAP Today's such a be the call. the call financial measures read financial earnings date Barry, that or to materially Act earnings XX-K, including the of company's initiatives, after actual the most condition, that statements release that on current forward-looking and business this any reflect I and risks to for filings, of statements. company plans, cause our subject Reform Securities of statements update no Private arise events Litigation the results The turn the now and over growth from to of SEC circumstances call also prospects call recent uncertainties. address obligation of and conference refer of Please information to investments earnings financial differ our includes investors.bestbuy.com. results risks operational

Hubert Joly

progress to I XXXX: good Best everyone, joining us. today then Corie holiday making the of then we're against quarter for Buy and the on Thank our Building performance, I'll results Blue our details review and our morning, additional call thank discuss briefly the financial New third Mollie review a some and quarterly you, and with outlook. of over begin for our strategy. turn will you

reporting We for are of bottom negative X.X% the the revenue is and fiscal X results comp, a $X.XX $X.XX $X.XX X.X% include billion, year. quarter to compared strong and These to So top results line earnings last per which of today, significant share Enterprise XX% increased third factors. XXXX. we impact grew we Enterprise to

despite what due did quarter. fourth revenue than materially major revenue characterize quarter, moderate in This in for was the the quarter a we the This in models sales was until launches as not impact expectations the existing their category phone new November, of selling resulted more mobile delayed first million. than our related October First, The expected. as in the that softness is lower start phone mobile mobile fact to customers of $XXX purchases. was significant which month in in phone

Florida, of and impact the the Puerto South Mexico. disasters felt we retailers, most Texas, Rico natural in like Second,

losses. that by happy pay, these our to points our and communities, approximately share course, comparable deductibles, during disasters suffered including was, $X.XX. impact all and the we're in and associates points, of the associates of to priority negatively are safe repairs related first sales them our XX was insurance, though negative Enterprise basis of the costs, the Our impacted even estimate affected with safety XX some of We employee-related and well-being basis to our earnings that were material

announcing the we strategy, two Earlier these strong results are this launch today despite Best our announced well, are Building within we're the New absolute the earnings of year, guidance in factors, growing. we Buy in growth Now the Blue. terms. are XXXX: August we and And shared

we're our investing our returns also of while year-to-date, year. the is strategy. initiatives with demand, our fact, for shareholders our capital significant In of guided is And what able resonating customers. our is generate are rate key in beginning allocation to This revenue is fueling above the growth growth materially and X%. innovation EPS capabilities, we had strategy and through at our the we and Technology

of such, As of results. work all talent, proud individual soul in I the of and and organization. am collective their great for associates these heart incredibly I our this want to the the thank delivering

are our we ahead, excited Looking for holiday. about plans

all ready our customer's Our or of care in take customers stores teams keen to across in the functions are and our home. online,

phones, of categories, home, toys. and assortment curated smart across multiple products new We great including gaming tech have a

compelling We strong calendar promotional have a brand with messaging.

new range again, shipping updated offering this our an center same-day and cities. gift free offering Advisor are, in a we're We available including new no XX of nationwide, shipping capabilities, and minimum, In-Home year, with program now

both we're guidance bottom as year. again, and, So while we availability the increasing product thoughtful line quarter our during are, and the about top for quarter, the fourth always, for fourth line

some strategy. in XXXX: of Buy of implementation our the Best review Now our New we'll the Building progress Blue

excited chapter relationship deeper We a with with build this next significant by and competitive we to vibrant, and growing in are have strong, stickier company advantages. opportunities develop customers our the

and thrive We in committed today's tomorrow's company that are to building can environments. a both

as sell. our our at great we're home growth out work sell we doing The key smart expanding plan by the in laid the and evolving how is of position we in in part of believe and to and store. are merchandising services is we build are enhanced smart and market all In how experiential We the sell. on the home market. in demonstrations assortment, by this a We a space in home we stores capability into example smart technology leading opportunities expanding departments. and have what both our advantage the have expand products, our new continuing we of spirit, solutions we to curated of unique needs-based XXXX meaningful take to and what solutions Investor head designed demonstrating online a Buy critical, to we Best September, way holiday, showcase Day expanding in As

home we've sure to solution Amazon stores Home make great an with offering. this, of stores and what Alexa In To store as dedicated Buy best that and for previously developed home smart security powered Google you us, announced, come to home XXX when and new added addition, all with have Google incremental automation collaboration a work XXX Smart complement in Best employees Vivint experiences and by do shop a we'll smart identifying you. would X,XXX job have

testing As as Aging stay twin adult help of connectors health cities we we piloting home in Paul service parents and are their home technology here, the smart Day, aging possible. St. as as rapidly children and very early in a offshoot as uses Assured the the connected to our remotely that parents. long smart Buy Minneapolis of their on called locks natural set of a our growing a to in aging home and discussed in market. non-invasive their focus, at safety smart sensors piloting seniors automation homes the the the We're check opportunities of leverage lighting. Investor Living door of such opportunity increased and also and to segment benefit in from We're help Denver Best

not we to experience depending across ability customer also the and store This and to tech we customers customers' a provides limited the that across September, services in we're product. they online, both channel, store opportunity via channels. use We customers, support on continue mindset. technology that if supporting to when what of new offering they is lives material needs. phone currently are matter in-home sell. just channels discounts customers technology selling to or them have Meanwhile focused have relates includes need Total in all the bought stores within improve all and on a it improve is promised. support is to over and of the solving do only their as products no how to we their available pilot specific our cities what and underlying Almost also believe our to on We their in not significant for for where As needs support on the to the XXX expectations XX/X simplify support evolving the expanded and see sell Squad but The needed. U.S. together we are customers' all online Geek on are now of different expanding working to In should XX focus customer it.

channel when they progress have their often certain online when channel we online are see deal by is the XX% they sales XX% online are QX, certain. sales. driven as scores great In a purchase customers improved example, our continue our billion, increased experience in we've an made and in-store and less grew of innovation, also revenue. NPS As use now most and In store Domestic we $X.X growth. online to and our channel, evidenced which the the growth to strong of We've revenue significantly about

this the versa. finish various designing shopping in experiences and customers and online their see or we channels. it store use Ultimately, the for process opportunity linking and start to makes in it customers easier their forward, Going across continued examining how channels journey in shopping vice

appliances customers mobile, particularly choice, also We're in-home on reducing the In-Home our alerts a takes pricing Advisor in to have In-Home are serve for of enhancing professional the be to major mobile pre-orders In more We're consultants for week broad clarity the they are are the contact phones. where needs advisers. a program store to quickly. text significant smooth with U.S. are to and We at provide activation. customers to markets and Advisors using channel. potential, phone work phone realtime where who various pick experience broken customers five program. using are replaced, streamline this of their In on areas in in-store growth technology result across notably need consultations of our we're for options make for customers end, which experience in sales and of portion that to all improving online most available building effectively a XXX carrier as replace and customer appliances we approach expanded do vendors. those with September, They product store it single activate their who'd point all before we up to of appliances, clear, to making to allowing local very The time covering focused also that appliances all To the timing activation. we online the phone significant clear online free for example, searching have the address more extensive needs knowledge, completed an sales training it like

Our of advisers be up, to pleased are ramping we and continue the with program. the results still

advisers expand next enablers. investing based to we're on in To planning early a on the based our demand. on we're the number fact, initial In of strategy, by year XXX results, early of deliver to range

a the of great built several key capabilities by past investing assets have these and We expanding years, and over we're assets tools. in on set

help management customer investments services build us we're choice, and relationship for knowledge We're example, the volume, speed volume-based for So, normal investing making that to supply in increases our management, offset chain platform Enterprise in expense. and technology in the efficiencies tools.

during time a holiday opened for For season. Compton, the center example, in in California, quarter, busy distribution new the we

the by these a we've is to end and in As in begun $XXX the fiscal going capital costs this gross higher annualized why expenses in of of on be pressures target, our current million five XXXX. by profit be years, this we past is the multiyear in this committed to reducing After year, cost optimization fund completed is investments, operating additional work to investments offset established in this ongoing journey, business. QX efficiencies creating $X.X of some and help billion reductions is which year, and to and resulting are

achieved towards goal quarter, million we $XX new far the of $XXX a million. During to total our thus

third XXXX the iconic So in We've pressure position us made natural significant results for despite the against launch from delivered later summary, value also strong Buy the and the Best to creation. our disasters. multiple progress in we top long-term strategy well bottom line phone and quarter

$X.X through approximately billion our shareholders returned both year to so Additionally, and we in this dividends buyback. stock cash far

all our our We fourth original we the fiscal a planning backdrop, of are announce season pleased billion. this $X successful of year. we are, for we're to share and for approximately financial expectation well-positioned to outlook holiday billion $X.X therefore, that momentum raising spend With believe ahead of repurchases year, and quarter on are for this as the

thank for they So, course, will associates of last again, of do our what for, this season. all like holiday and this to I'd their quarter work

call You for QX all are turn to like our performance our more and details over amazing. on Barry, And to guidance. the CFO, now our Corie QX I'd

Corie Barry

Thank you, Hubert.

quarter talk we them about diluted range. shared would which $X.XX, our about we results last within of of Before of versus On revenue were the year, like third billion, our I expectations to I both with talk share delivered versus you quarter. $X.XX earnings per last guidance

our growth comps product saw top As with all of strong categories. we line Hubert almost discussed, positive across

enough estimated to our material more to our lower comparable sales than phone the range. $XXX below sales expected was the revenue guidance pull launch, However, caused comparable phone million, be than by later mobile

higher that addition, our point a impact and are distribution needed a we right comparable decisions Like XX at the of Rico, pressures Enterprise impact $X.XX had Puerto to our a a lower partially share costs driven share $X.XX the $X.XX thing devastation. they we due employees, basis negative decisions offsetting versus rate XX% a and per support in earnings to change. about year. supplies organizing or disasters QX associates our center, increases now Domestic investments of but these of XX we customers was revenue, higher $X.XX In our to earnings three These our Many lower basis a stores as cost, where days delivery these than by a third came Slightly including $X.XX. on growth the benefit benefit. and will to tax the increases mentioned, talk quarter to other few were $X.X have $X.XX made share by expected the within increased revenue from much were last sales income do. definitely rate variable companies, tax of per count estimate a a in increased Enterprise to per provided and by our primarily effective point Domestic from I natural share. many our on Hubert driven communities, diluted SG&A share to increased benefit and per revenue. net higher This offset results flow-through expected Enterprise X.X% increase billion.

XX saw with the by computing during of X.X%, past merchandising home. the net appliances, increased Buy Additionally, being profit-sharing portfolio. From million negative XX large-format sales from increase year. comparable $X.XX by was almost Mobile Best across revenue comps partially or of segment, In the largest our driven QX had a to XXXX increase $XX and share from impact we of we fiscal per lapping of and revenue perspective, $X.X drivers from stores billion. benefit periodic X.X% closed This plan positive loss our categories services primarily product Domestic smart a offset our all the

down quarter share industry the but basis, category, third a quarter, As up relates the gains the category. year-over-year material theater to on for were of sales was our home straight QX in in resulting slightly another this it

basis, in points of foreign and mentioned, and year-over-year As due revenue online $X.X XX.X%. to $XXX value. Canada order higher conversion revenue comparable approximately revenue of basis growth revenue rates was phone and $XXX mobile average of launches. a increase International Even driven XX.X% timing sales due both basis. to pressure, primarily by Mexico. currency million comparable slightly was positive impact Hubert This increased up of higher X.X% by the primarily was growth though million XXX of increased a impacted on category of Domestic we on in mobile the saw billion

plan now rate the offset two, versus basis International approximately fiscal year-over-year million Turning categories; categories, Canada margin margin profit by by, profit, XXX XX gross tech XX.X%. a launch recurring computing Domestic particularly flat at the an the profit gross to XX.X%. to Improved mainly year profit to appliances from one, multiple XX total negative The benefit support basis in gross rates point Canada's margin in home, were and The XX.X%, long-term Enterprise model. higher lapping from a to profit smart periodic rate the XXXX primarily decreased gross gross lower service across in basis due was $XX to points our lower in services pressure sales impact due points portfolio. profit-sharing of QX categories, the decreased driven rate and offer, last rate revenue

a revenue, represented reductions. rate the negative decrease line SG&A or quarter was Now turning was SG&A rate XX.X% primarily on primarily point basis, cost billion billion decline. basis million flow to a increased XX.X% SG&A. of $XX point third increase was of $XX our an driven or revenue, Enterprise rate by $X.XX but XX of flow-through $X.XX SG&A XX.X% impact was were or primarily dollar by million. of revenue. Domestic advertising increase and in the the basis expectations. the an million From due leverage. increase driven partially due exchange to costs higher driven increases rates. a leverage. This with million. of growth sales we increased These sales perspective, revenue, of offset foreign $XXX point This The was variable XX to International investments, in ended increases $XX higher expected expenses was by The decrease basis by of XX was increase cash which

our the in year-over-year, strategic early, were and respectively, due of inventory bring inventory up decision payables On ahead X% to quarter. and balance more holiday our sheet, X% the to

to fiscal in and XXXX supply in relates million capital certain expecting as $XXX spend now we to we expenditures, chain it are investments e-commerce to chosen have strategic million. year full approximately last million to accelerate As our like has our $XXX reminder, as I versus year. XX to now about weeks our which, previous talk fiscal weeks a This functions. expectation would is XXXX guidance $XXX versus XX approximately of

revenue X% previous our outlook raising growth non-GAAP versus of income approximately our approximately outlook X%. growth And operating are we X.X% to X% to outlook to to our are X% versus We X.X% raising outlook to previous of our X%.

we a annual implied was outlook raising our are the earnings expectations last what on our As QX provided call. in versus result,

of and sales revenue Domestic $XX.X On to X% flat with $XX.X Enterprise growth we X%. X%. comparable of to of are basis, sales X% a X% QX billion, expecting guidance Our sales billion to growth is growth to segment International comparable comparable

diluted per from guidance to operations $X.XX non-GAAP QX continuing share earnings Our is $X.XX.

Our assumes XX% than to higher effective QX which XX.X%, EPS income guidance rate of which a discrete last non-GAAP from tax items. materially year's a number is of XX.X%, benefited

share Finally, average our weighted of guidance approximately a assumes shares. XXX million count diluted

QX factors. Our number guidance a of reflects

are First, as for to the and our e-commerce additional we to the of we to XXXX in drive back supply in areas continue discussed half Best quarter's decisions forward. such additional strategy shipping, chain. strategic on strategic long-term investments made in choice customer investments call, Those year last as proactively make the Buy vision

or the share Second, profit lower share last of $X.XX $XX we approximately revenue outlook than received per QX. million includes

year will quarter reminder, expense compensation $XXX adjusted million for over quarter Third, of the the now reversal This the fiscal in that to call incentive to is the earlier this are due we full year's compensation the week compensation Fourth, additional both higher year lapping I a in XXXX incentive expenses the SG&A as of performance to last better adds approximately fourth drive expense. higher performance quarter accruals our a expected turn quarter. year. and incentive of fourth fourth from QX than questions. operator that and the in is extra fact quarters

Operator

Scott Wolfe first you. today Mushkin go We'll with Thank to Research.

Scott A. Mushkin

questions. taking guys. for my Hey, Thanks

Hubert Joly

Good morning, Scott.

Scott A. Mushkin

my just we out two the from as take to to year, next problem. we those of Thanks. wanted question in that quarter, fourth thoughts and as into costs, a quarter, a get get the would your So, on then things. second lot big look pretty get to but it's people we're getting be on fourth noise labor that? only your the category becoming not Wanted So TV

Corie Barry

more my Hubert here, add and little color. a then bit So I'll do best can maybe

say of about very first technology the Obviously, the X%, excited industry terms TV, technologies. to that, show innovation better thing I uniquely would category. saw to according feel down is in in positioned mean, of be we in within very we're can new we the those And to that like continue off In the the I the see first TV the XX% about NPD data, year. we revenue QX, the which in down was part what was we than

that but and fourth team was We of about quarter. saw we're positioned. quarter. screen put we that we that bit mixing slightly but – business QX, fully into part actually top sizes down, asked heading a highly competitive ASPs to you we're up, bigger Similar little we were were think quarter, big it's in those us, Obviously, units the that the and that, technologies. like about of a up On was positioning into For and excited a labor really more featured together, well plan expenses. has the

been continued of we majority One that last all, remain it years been investments we, very bit that a And little labor. of top and on more to first than have of the compensated then as other we've marketplace. is retailers highly of over specialty specialty the better ensure some little two investments a competitive bit given is called have already investments labor making positioned we just vast is a in labor, in our almost out actually the

said So a Day Investor the investment like to will likely investment, for that thesis. even we forward be we piece us, the of at feel going a and been piece that has continue of

Hubert Joly

stores. energy been it with but place the would think One an of believe our result the Scott, on the It's a and very reflection committed lot we We other to turnover work engagement, the make have is is proficiency this a reduced you a feedback that proficient. stores, very think a make place, of more reduced great it, experience. together one in And we're continuing employee and and as we've on turnover, in great really I the and experience work level the of to compensation, of of people are actions. great drivers customer it's labor thing it leadership by great on the the I a and much add on strong of low, if there's exciting we're performance focus of it's that historical at of this, materially more to to excited got course, to resulting and in lower

Scott A. Mushkin

guys. Thanks thoughts. the Thanks, for

Corie Barry

Thank you.

Operator

with We'll go next Peter to Jaffray. Keith Piper

Peter Jacob Keith

thanks. results. of curious Good your with it's Nice Hey, categories? you morning, backdrop perspective partially just in on do And a continuation industry give industry? that gains feel market this versus balance Was for of the maybe guys. in NPD the accelerating market result share. a trended you growth Could how like same-store then on share sales pickup

Hubert Joly

Yeah, well, think the and is strong better, so it's We first of compete thank course, broader NPD. your is plus not NPD as we X%, maybe this it's performing something but much like for much appliances question. that. all performed And quarter. mobile, but quarter, than know around you where not you

The creates as So the gain lot a market a customers go. share we're relatively your market of this what of during pace environment. to pace to sharing look continue is innovation, there's driving steady rich and environment the our how need, that And you an technology in enthusiasm innovation quite share. us. quarter, In spent the meaningful of course, gain general, ahead, help steady, the that for rich is question, bit we time for fact of a that we opportunity seeing demand. is When is Investor of it we Day – but

continuing is the like of that and our performance And as innovation in and – combo that in resonate. great said combination quarter, great you as the the neighborhood. we a hopefully, And so in the a prepared it strong fact really I company is technology strategy it's remarks, see my because to

Peter Jacob Keith

that? That's Hubert. what category on color nice follow-up, provide Could of this a was with a bit a drove There the pickup And quarter maybe you appliance great. quick an little acceleration. in

Hubert Joly

seen housing years mean, by I from we Yeah. and recovery We is think ago. the still measures that all few the have very young – peaks still far a

So is continued we're in course, can and control, share the another suffered factor, that, experience. that's fact I category. in investment The continuing but far to we as competitors of customer gain helpful, as would have the highlight, what this some

Our teams, Associates Power a of continuing performance best of many rightfully to invest we We opportunities. across by all to that experience D. We're from their so, the standpoint proud seven fact customer were are very think J. continue criteria. awarded there. the have and we

in focus So strong category, opportunity we is that us. and for think strong general, opportunities with that's this customer experience, an rich on

that. So excited about

Peter Jacob Keith

holiday much. very luck season. Good you Thank with the

Hubert Joly

Thank you.

Operator

next Credit I. LLC to outlook. We'll follow go morning. on Seth to Good I with (USA) Credit the Sigman Suisse Thanks. QX Securities Suisse. Seth Sigman up - wanted

NoteX? it You were that. fourth or issues. some the Can in last quarter. including that be lapping comps slightly much some us had the to trending you year, maybe would QX, been to from in range the QX that things guiding the product it assume of that you Obviously, supply back you're at the million and even rest X% So imply better midpoint. that you If than remind get just the we from of some a business it's back, shift down have lot then this of basically $XXX would the of

just So of still is there that lot is ahead us? wondering of the right? that just holiday conservatism that and than reason Is other for a math, Thanks.

Corie Barry

good usual, math. per with you very as are Seth,

the we on million performed to perfect reminder, it's was a $XXX revenue range. we quarter of You're had absolutely science. than said And $XXX to year another because right. that if $XXX We Note shortages, estimated million that a last not thought product the and we as so said perfectly, related everything million

moving saw was shortages all we then of are in So product $XXX million volume there's into the phones. where from perfectly of because Not some the additive the QX remember, those to And QX. some $XXX things of obviously, question million.

And so there, double particularly obviously. of we lot kind that underlying counting that risk. a see the not of -you're And business, it's

the everything and business. QX takes we're puts going does thoughtful the to about not during be season see, leading into trying season. obviously, think QX it competitive across the I environment exactly like and And holiday in and performs that you're the to the

again And We like well-positioned. incorporate have is prepared obviously, availability so like head it this we we're the Hubert into plans we're always like given as factors even in said thoughtful we the remarks, back that quarter. we all do into those And feel range does of the feel very thoughtful of front us, it. and in about

Hubert Joly

thoughtful customers thing The scorecards, we it's much only type add, so or the do if there's of but exciting, would one that do product will is or that I And effects. mindful spend about quarter. Seth, better, during the only we're share secondary category when wallet. There's one of

to outlook what trying helpful. I Suisse Sigman reflects and - the would say. we're this, thoughtful that's So X% I. Securities very our (USA) so Credit X% That's best Okay. LLC thinking about be Seth to

question Just follow-up on store your comps.

up over So helpful. been help you if the that a color last Thank quarters, us a pretty basket? just traffic Is it you've two Are X% you actually they've service? be meaningful conversion of stores? as there seeing Any would the Is about the better that? in you in exclude understand Can you. improvement. pickup e-commerce, improved better drivers change

Hubert Joly

of great call on our color. company. and provide store to the This the great play in across our happy great reflection a a category the of that out role Sure, is teams stores and course, performance

the of they stores. online and behaviors I in seeing buy in terms they buy what shifts significant think in we're what customer

solutions clearly, traffic for to items, focus great a to interaction tend buy traffic discovery, Blue their and see standpoint, items, and more complex smaller they gravitating more frequency, experiential to customers in higher to the higher-ticket stores. our online the tend store from trips the to So discovery, Shirts as decline continuing with we're

So higher conversion seeing clearly, in in the value the the increase also order basket stores, average we're or rates.

based associates, proficiency of store on go In customers fact, they the great and the fact higher before stores. engagement the our to also that done more research have but

how I significant And So positive. stores. and program felt do the can in In-Home very going about looking we initial you things the ahead, performance. for think customers But is very about some – totality, we help Advisor can online to excited our customers excitement see how had how in comments I about had the we're we're very, our then the in in great to continue channel response a shift and to in-home you

home in customers. for competitive to happy excitement stores in lots And Okay, the it's and Sigman a of holiday. their good advantage. Securities (USA) luck - Suisse is, help fact, great. Thanks So much and unique ability how we're online, LLC the Credit resonating with I. with customers our in very in Seth

Hubert Joly

Seth. you Thank

Corie Barry

Thank you.

Operator

BTIG. next We'll with Alan to go Rifkin

Alan Rifkin

congratulations well. you Thank much. I'll very add my as

Hubert Joly

you. Thank

Alan Rifkin

But forward. that it's initiative lowest First Obviously, the was look in services. the quarter, question if performance a going guys to you within relates in of the comp wondering, on performance understand you it's business compared of this category category at out? major program, for that any the the base. in but laid to was your what services the growing and terms early I you is early are lowest I where you expectations

Hubert Joly

the what support future, warranties looking we're you, Thank Alan. services. is some at tech comps of extent, compared narrow large for the of the in view it's as services to a Yeah. on Squad. What Geek To relatively from very a the well as report commission the in services we the

the of home. As in that at not XXXX, there's In-Home in customer's Advisor, impact consultation the you actually look are as the will example, strategy particular a free that great Best number components is not that a and reflected service-oriented many line. overall Buy strategy

no triggers are So consultation, of product course, some from it that services. revenue the these enhanced and and largely revenues

services to we're moving a that's Best more So powered in Buy line it's either. as that service-oriented today Vivint, by the Home Similarly, such not Smart approach. managed

service – going some indicators. journey that that we looking we to about overall to to fact meaningful what the our going to so – the so I'm on this. service-oriented, take But is about may have the hopefully, time strategy. and of ahead, an think how service everyone clear – in line best we're We're think keep is customer-oriented view narrow a So that

is line attached largely some quarter line, extended attached the comps, to aggregate broadly an business Now with related in services that on installation business the as performance of The in services. business. number the is it's warranties and comps, in our today an the

on anything So the material missed short there's term, no change. would surprising that? I in have not that Corie,

Corie Barry

it. think I you No, hit

Hubert Joly

you. Thank Okay.

Alan Rifkin

explanation. I appreciate you, Thank Hubert. that

iPhones launch. an stores you historically, to allocations? question has Can about new to second the the of Thank you in particular, what a the obviously, new past lift type The your maybe And mobility and with compared iPhone to do launch in talk of you? of traffic allocations has much. given iPhone very

Hubert Joly

in vendors around teams Yeah. experience, improved customer a in number very the am things. particular launches, of about how and have Thank you a But it's in for for Alan. we've we we online, and numbers very, ability specific process I terms it strong worked one I continue One very we've me your then you delivery work to the good work question, our times. excited specific and give the – to is on the the lead particular, is is a but control, relationship easier vendors, what with to out key with product, let in take very say, just continue general, great even handset them. thing pre-order have done take won't times closely to when allocations. the the with orders about pre-orders making extent, facilitate of key we to the

on improved and we've We of then call all have store. online both in the the this, described

created it making great it do great really a the is Whenever iconic and So In it. to work category. it online the the partnership easy launch, vendors, with we've there, experiences on to in is of phone great making handset We're excitement. focused The there easier most exciting then very the purchase category creates stores. stores. in a performance

had that this phone fourth in quarter So iconic I fact fact, material you in positive, launched impact. the saw our think these a that, and are

of you category. So this impact an that gives indication the in

Corie Barry

traffic. the about question specific your to Alan,

Alan Rifkin

Yes.

Corie Barry

that's Like whether can our the traffic. launch think with gaming, absolutely more sometimes online some it's peaky we that it's what see, absolutely channels, see we in mobile, I any sometimes it's across and we important, both stores,

Hubert much different. that I important a materially is what think you traffic looked though, our across quarter broaden note, haven't it said to overarchingly when what's patterns reinforcing

Alan Rifkin

and both you Thank best season. of luck for the holiday

Corie Barry

you. Thank

Hubert Joly

Alan. you Thank

Operator

next go Deutsche Mike Bank. with to We'll Baker

Mike Baker

those I the initiatives, focus on other the you. services long-term to Thank initiatives. in-home wanted and

So initiatives and down that much in how $X of how services have coming about break product, sales billion incremental is these long-term please? your and from Can you you much plan, roughly. from in

Corie Barry

morning. Good

At this said point, So of long that we're we we the we simply each them still range from mode. and – specifically down the at plans many not it very breaking initiatives. test Day, being in Investor have much too. Part that's of of

point three we're about at testing that models you plan. doing you're as in different support and in XXX to example, tech total think an stores this If what

starting to So you think it's the where tail difficult that I What out tell where we're goes. the places to seeing excited hit for longer slightly roll started things advisers Advisor, to me what that In-Home have already in fact, like based to on to we is number started increase on that we're we do demands Hubert in reinforce And would the we we're about fact seeing. of on there. we're the the

in we're of was that that would likely, but And by them of so supported be process. initiatives need early our hypothesis these combination definitely really that billion some to a and $X

Hubert Joly

and more is as Yeah. and deeper, course to around qualitatively, XXXX color. we it's again try Qualitatively can, Buy direction the soon around of of provide But Best growth, – as we'll going relationships is meaningful, that a company. recurring big over have This and a Buy you Best because stickier more recognize to relatively to building time, be revenue streams. is journey customer

for customers encouraging. time. seeing is these going to But very with direction So is new it's numbers in very become meaningful, how these take order to for approaches exciting, me the and resonate

So cannot this heading. But hopefully, more be the feel sorry, you is we direction precise.

Mike Baker

way XX like And you what could Is you to that, are if markets? down you up Yes. Can you that? adding seeing break I that's about advisers. certain causing in-home add it Is talk follow been than on a are more are they're to there ones on add of better is working the to to that starting it color people. causing have longer, in those little some that help? bit Or markets are place successes the need you certain Just others? any

Hubert Joly

Sure.

we're we're to XXX – So moving XXX. adding from

additional. XX So that's

So probably to it's initially a that higher meaningful. XX% planned, year. add It's next continue more and than we'll

In-Home So the Advisor to demand the It wouldn't get days. an work to actually this. the lead all now, if into times lead this and country, you of We underestimated we try be across I down. were would to We're trying you think could your test several afternoon. be time home so

because risk a quality. skilled are And to it, these too like is we if we're week, think highly we'll point, if deteriorating a probably "overwhelmed" out the grow were you this I demand. this the bit at rush by a then and professionals. ourselves case quickly this you so something run you initial of where try And pace

underestimated adding quick be to so to overboard, So while to a XX were be the demand are don't it's but and to your we year, of want beginning bit answer next pleased the too frankly. fine the high, go going question, a we balance, by days the we out

Mike Baker

you Thank appreciate Okay. for the that. color. I

Hubert Joly

you. Thank

Corie Barry

you. Thank

Operator

go next JPMorgan. Horvers We'll Chris to with

Christopher Horvers

strong results about connected Thanks. of to in seeing are home Good You adoption see Can talk where side you're on we year started terms that on you the ago. about in curve? what that a morning. category

comps of is adoption the we Google the the do platform? how the you consumers terms And In-Home that higher think in tail and in Alexa category? stacking So are long of Advisor,

Hubert Joly

Home. Google Yes,

It's to days. it's number based and have it devices a able assistance. all I survey wave, is the we'll an have homes with that devices in voice and connected, measure the my the of that think significant not a of that This home. are connected we're people share devices was their still and my I be XX of early are on actually just home. you. anecdote connected, in I'll there

American bit average a we're in home, compared but probably the that's teens the to extreme Now nationwide.

be remarks it people this anticipate, referenced continue voice continue assistance going a say, particular, bought, prepared to in that certainly holiday it's they'll device, smart think smart lock, to is home during we We is or but have once the so And generally camera smart going my be demand. are going in a to add. high this I what speaking in we're to let's then to because smart tend seeing a more

this is and exciting very it's early, we think So a space still frankly.

Christopher Horvers

at differentiation cameras thermostats of that so up of from those this locks any actual is and of devices and driver following just on of specific versus the that, of and growth in point? sort the the primary so And sort terms voice guess, I adoption forth? assistant, the the Sure.

Corie Barry

supports that's aspects exciting of we're most of Hubert that actually category smart and One what depending is seeing much category, that home the different of said, the been on quarter, the grow. things about the within

within it's that seeing we're in, interested people all pieces of of part voice monitoring growing big that, cameras. points. of that story, different a within the but kind are consistently sub-categories different Sometimes been many growth Definitely, been has the in the at

feel big parts is also just So of also continues but voice curiosity definitely surrounding the part heading we're within category. like both home to the nicely holiday the nice be seeing But of that purchases. good of the part very driver assist that, a is into we other smart grow

Hubert Joly

of help well of whole stage the and across our this are and positioned really and in-home customers trend, all really Because to to plays a with discovery the brands. capabilities, stage. implementation and home smart store the wide we course, And the right? a range support then ability to obvious, plays, strengths, well online We're state from I'll player devices

about the is So Best home. part Buy of winning a big XXXX

Christopher Horvers

of the the the a gross is hit. much. you big International total terms U.S.? rolled very Thanks tech Is in rollout then follow-up pretty out Is the that question services? think the and in something should how that margin Understood, took we about

Corie Barry

That's a question. great

on two, point that three this come what being I than earlier, in we're payments to you that different not, very over where would more a correlate the quite ratable you side. like can view a ready time U.S., have front think like at that doing are. you're I attaching the the said, that model about XXX but to fulsome which looks moving we're looks what implications mean, we're testing, at I over business warranty the point, Hubert obviously, different we support talked because so a time So when that said, with we stores, to about of the is models and

quite out, first the enjoying is the over rolled time, rolling question and Canada. the part we time support customers just as more some interactions it. the of get you causes revenue it model because to in that, what we're I that very is time, it you over determining implications once near that promise think provide early little the the get I are it a in clear of we to the know model tail but a upfront, we've a that product And they're we into the the be want and bit their of over you we'll financial product, U.S. term, and but the would those well, in so will you you're part what here. adopting look as And yet of different great do it on It's expenses incur correlate we It's out and not with are.

Hubert Joly

is and only is monthly And that Canada, what offering subscription. in big version I would Canada add difference the U.S. between the we're is a a

subscription. In very annual but if course, an also sell we have of monthly, we annual. markets you in different have the some So than U.S.,

really I what at fact Corie extrapolate don't point. that this that the reinforce want U.S. to to said the So

Christopher Horvers

a Have you. great holiday. Thank

Corie Barry

Thank you.

Hubert Joly

you. Thank

Operator

Citi. We'll go next to Kate McShane with

Kate McShane

anything you wondered With at all terms if pulled I my competitive starting And and far everything could you're at beginning Good different now environment? than comment of really there morning. in question. Thanks the is taking markedly so the holiday anticipated? on being of November from November, for what forward you seeing

Corie Barry

holiday changes holiday you and Kate, is promotional. question. slightly, morning, Every thank Good for massively every the but

I years, much at last those XX week. like like definitely, bigger over can the you the X, peaks pulling earlier Christmas think Thanksgiving or in can you earlier, promotional see the large and on you're look week and periods see trends holiday you especially if right that,

could little evolve massively our of Again, in composition I wouldn't more that some And say earlier support a builds. we'd this, anything earlier the different of or more would even and the It's kind there, year-over-year. over so holidays bringing some of to we not unexpected. something say support changing team I about that's there's so that see We time. how continues the I inventory sales. of massively is are these think talked holiday how flowing, out promotional

kind changing And of holiday. it's so it's definitely the of unexpected, composition not but the

Hubert Joly

drawn meaning for from here – right, is opera last Yeah. conclusion, until I've lady seriously. And that is that over Kate, several fat No, the reference, the nothing okay? sings, being an one years that's

conclusion But until a consumer presidential the so was days, the year, to what of I no was can wait results referencing. to are this a you we're drawn that holiday different varies last see have the timing for singing because seeing the be You was end election. until that the there year, clearly, if of including And distracted remember this few pattern. significantly, end year a

Kate McShane

of remind think changing this the year regards you. versus shipping have customers, great. Thank had last last? to you you tell to year that us is us you're versus And the how there where going can just with to cities just I fulfillment year? That's incremental number you this to and is same-day can what a customers mentioned is

Hubert Joly

In terms of what we're offering in of terms shipping options?

Kate McShane

Yeah.

Hubert Joly

year, free no last shipping like with that offering So Kate, we're minimum.

that's free. not The is is not change same-day a That XX charge little a the varies change. delivery in bit. So The cities.

time paid. I I think delivery, it's believe what ordered I that's the going to last something for be same-day $X.XX, I

delivery really – new is in the that's XX same-day factor. So cities

Corie Barry

flexibility. expensing speed I into and talk general, included about guide. chain In QX the supply to in some the trying and think of for we're general, we build

whenever to is in flexibility it's want next have things matters times, in cut-off two-day, those day, it's that customers to that same it's it, continuing the timeframe all get So it's weekend, the it's invest it to them. day, team that so it's the they

Kate McShane

Thank you.

Operator

Barclays. go with Matt next to We'll McClintock

Matthew McClintock

Hi, everyone. yes. Good morning,

Hubert Joly

morning. Good

Matthew McClintock

just stay Advisor to Hubert, In-Home second. a I'd the like for with actually

know because want your you You're at about spend, holiday how and to than season talk your better the you there, some did pull you that hiring was potentially this I thought. frustrate Can you much been so I expected? demand didn't Day. marketing at the Investor a went? XX more you because in-home but point marketing maybe demand continuing consumer? on maybe have exactly alluded plans you to are marketing back your advisers commercial you out just there's how Or know program

Hubert Joly

are things the light. results, team ourselves weight the relatively seeing team asked question, as early actually We in-home continuing plans Matt. you, Thank reviewed the is and the The expected. of and store marketing marketing the the Yeah. on advisers

was that. no around And so there anxiety

great focus is and more being and great of reducing a on so on job responsive so to we're time, forth. Our and doing to do customers job, a operationally these lead trying

So that's been the approach.

Matthew McClintock

That's just question. helpful. Corie, And then a Okay. housekeeping

Can repurchase share cash sheet billion prefer us that thoughts the balance this you on your extended to you would update You year. the your level going on to of on $X keep forward? balance

Corie Barry

Yeah. A great question.

in not And updating down the a over way. of sure our We really amount. we repurchase the balance that we but is reminder, out believe the so sure business that to right planning we've always return. that that allocation a right that to the set beginning year we That where first, reinvest want that cash want we're thoughtful we investments seeking, we're balance said to and capital the make of first, what still like said, never the that we and We've very in two the clear exactly continue are I clear and $X to using said make at achieve come we're strategy that work we're new as feel to have billion we the years. I'm just being ending

in we're But to repurchase dividend so point, sure and we so of this some do that. And pacing we that we cash the make possible. wherever the continue obviously at same return

Matthew McClintock

imply shifts that would historically at theoretically, that balance reoccurring maintain that, the your or towards follow-up cash that the as just sheet? I could you Hubert model on stream outlined could business lower If on than service more a revenue balance Investor Day,

Corie Barry

there's that really go to into than is certainly over likely do can strong things what as down. a business confidence you that is balance obviously, Yeah. of these Those things. I mean, your beef cash lower the lot the cash that absolutely more continue implying balance what that's some vendors. And ahead with performance, that of up partnerships work One the just our time, and I think to, today. important have that are gives a Hubert business, strength stability alluded you and actually to the we overall and then in you most of work

Hubert Joly

reiterate something want recurring development that's is going take do to of time. to that I revenue stream the

very of want it's material assume our very going but I to take already So time. part transformation, this next you It's to could don't a business. take to It's year going meaningful that be a time.

Matthew McClintock

Got color. the it. Thanks for

though Looking Hubert. to that forward

Hubert Joly

Great. Same Thank here. you.

Corie Barry

Thank you.

Operator

Simeon to next go We'll Gutman Stanley. Morgan with

Simeon Ari Gutman

Good morning. guys. Good quarter,

Hubert Joly

you. Thank

Simeon Ari Gutman

fourth question price as phone quarter people other quick one, earlier remind conservatism And to veering could $X,XXX, the point I'm the that any that taking maybe A the sales? eat on revenue are then just buying can an me, is installment the reason you? outlook. out on plan, into versus different think you X if to towards the Any

Corie Barry

the which obviously, start $XXX, are Hubert when me how it about of about when a income and let question, how the a hit thoughtful even CE, when over trying And can. as budget wallet expendable going referenced this, they a you with are So of that point thinking budget of even phone, share spend as you have kind stretch often phone. $X,XXX on far much $XXX price question, think to what you're in difficult to point of is quite and your to wallet with price holidays people really about you're on go we share that is particularly

are not has comes years, the year. of four it last we absolutely that's Then played about years, QX. of what the part like years, quarters QX when two earlier And three over the so to obviously, thoughtful the

account is trying And the take knowledge into go. believe we've quarter that to as fourth gained think we we of so some going to where we're about

there's is the the what profile, different revenue not decides to is way perspective, purchase In changes phone, is depending a The same the revenue the the alongside terms what. to and hardware. revenue we whatever profile, what or matter that from a the attached on of but in the That's revenue profile plan profile piece whether looks no similar. the sell that consumer

Simeon Ari Gutman

current momentum into the rates, compares next quarter these the going be healthy fourth enough Okay. know, next then comping, tough some Do meaningful product offering to the continue past And rates? And don't you're year. in then service thinking I to year, business to digit generally low-single and you year will at enable continue? next to have but expect

Hubert Joly

two have This significant. to far rate And based turn providing the so a compounded ago Yes, out, of a this that next provided I our terms obviously, have we're today. been outlook, very with year. months not, mean, are we year year going rates strong implied year, in guidance We revenue very three-year for basis on far the Simeon, been so would a year. is revenue growth outlook number that have on the below this growth

providing I you encourage this yes, would not to year, this guidance But next point So numbers exact we're carrying for at do not for over year. these in next time.

Simeon Ari Gutman

Thank you.

Hubert Joly

call sharing where our are and conclude and thank really for our to want I you this we behalf, are us going. your with on we continued Well, work following about and our excitement where

And Buy to of a we're last numbers, on year, a EPS thinking comps growth where with compared where reporting we are the kind very all associates. you EPS almost are you few to have back when to years our XX% about X.X% yourself you then the great ago forward XX% about the and you at we in dedicated, of soul, EPS go growth look and ago, have these and growth look we me top Best seeing were pinch Sometimes thinking today, of comps and which heart, gives skills. big stores. again big opportunity amazing, to years terrific, five so to excited, thank They finally, just

X:XX on $XXX.XX, XX-inch, cool in TV event, because to to the you. In you stores we'll Sharp, next be that? we'll $XXX.XX, you how you encourage any at is in at that? want I Thank and that see or TV, XK you early would imagine Thanksgiving quarter. get XK XX-inch, can you talk stores If online, to

Operator

thank you your for conclude for Ladies call our and does gentlemen, participation. today. This

You may now disconnect.

Mollie O'Brien	Best Buy Co., Inc.
Hubert Joly	Best Buy Co., Inc.
Corie Barry	Best Buy Co., Inc.
Scott A. Mushkin	Wolfe Research LLC
Peter Jacob Keith	Piper Jaffray & Co.
Seth I. Sigman	Credit Suisse Securities (NYSE:USA) LLC
Alan Rifkin	BTIG LLC
Mike Baker	Deutsche Bank Securities, Inc.
Christopher Horvers	JPMorgan Securities LLC
Kate McShane	Citigroup Global Markets, Inc.
Matthew McClintock	Barclays Capital, Inc.
Simeon Ari Gutman	Morgan Stanley & Co. LLC

Best Buy (BBY) 16 Nov 172018 Q3 Earnings call transcript