BBY - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Best Buy’s Fiscal Year 2019 Q3 Earnings Release. 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 01:00 p.m. today. Time Eastern will Mollie I the call conference [Operator Vice now President to O’Brien, of over Instructions] turn Investor Relations.

Mollie O’Brien

thank Good and you. morning

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

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

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

Hubert Joly

for details Buy just an in our then quarterly us. on Corie for another I progress on XXXX: team Best strong and thank Blue joining strategy. fourth and summary, outlook our with quarter. the turn to our delivered to implementation over you continued make I and the we quarter review Good our call will and the for for our as quarter we share season. New In the results implement our holiday additional third update begin everyone, provide excitements strategy will of the morning, Building a progress performance, our today of

us. are We the and of continued have ahead our about excited momentum opportunities we

quarter, by and the enterprise delivered of top which last specifically, to sales year. grew last compared year, EPS non-GAAP of $X.XX, diluted XX% we So, is comparable we in up on third X.X% X.X%

enhance continued the our they the to customers with to we across us. also interact many experience provide ways We

Our experience helped first and by building. comparable top-line half by product performance was positive how in we across our are sales unique growth by responding channels, driven the and year, environment strong the to favorable Similar elevated driven to quarter all customers and revenue was the of the geographies categories. most are

outperformance Non-GAAP focus expected am better by results. human, implementing build Company rate rates. hard Buy equally and lower associates earnings delivering was a I our these across strong helped dedication, culture. of a than than margin that their tax expected continuing Our great to strategy XXXX share per for Best wanted in unique, to on a the passionate thank a work our positioning appreciative and I competitive and purposeful driven the Company And and their by gross has on

what of great expanding its in GreatCall’s our month, the home are leading completed we we GreatCall, off new we customers. how with to is acquisition consumers. life do services start health me Let aging for connected a for provider a Last start.

consumer We future and fuel solutions working in markets. and existing growth are to help together customers more to bring commercial the both

for are endcaps we’ve with department new connected phone as mobile rolled our recently a As range seniors easy-to-use relevant dedicated showcase that in that tailored out products devices step, of come and first such, services. a and and mobile GreatCall’s

who U.S.-based services can customers provide to connection, emergency and especially agents GreatCall’s a with through example, can concierge personnel. trained dispatch family five-star service to For them one-touch connect simple talk caregivers,

consumers aging that and their opportunities we to seniors as significant use help this, their the with providers. of for excited technology, payers families homes about the well provide that in Beyond benefits something are ahead can live as lie longer us the for for and

line the Squad our value Tech with where service a May. proposition we a that nationally members. as that tracking encouraging when Customer technology, our program from we they signups for as our Total bought During continued rolled in out no and or Having for provides expectations. their also results unique Support costs to third see is all well Geek unlimited support matter fulfillment compelling are in quarter,

on and In in-home reason services discounts to Best customers installations, grow another protection with with provide Buy. addition, relationship their

are and few words how sell. a we about evolving say now how me we Let

XXX we consultation a in-home quarter, our at XXX to the During advisors advisor the free year ago. approximately expanded compared launch program to nationwide

both by fact to customer that expectations. pleased of continues the the line the with and performance ongoing the our are We in track demand program

be As expected, deeper build our out to relationship-based strategy and with it of is our important customers. proving to an part experiences more

We in are enhancements. experience invest to continuing customer

the ability us call an customers our to still with for leaving out make while to are rolled appointment an just rather they our in schedule an stores, appointment. store advisor we example, waiting and for for and than So, the

shopping to Regarding especially customers in efforts our we use Buy Best for ways experience, online which easier our the making are to about shop to the in our stores. app improve we’re excited it the multi-channel and

or see you one customers including compare multiple products in-store few another examples. to give reviews price, specs, we Let trying features. me a Frequently, to

the in-app their these can results If they With researching they compare Buy Best results. want, later, products easily phone can for the to purchase. feature and still if to saves they an app, use use they’re scan a now

for items makes online it in-store. a launched new and both find customers to We box open also that easier much recently functionality

are determine customer to customers whether condition existing Squad the being use purchasing by shopping, eligibility confidence meaning -- in the we local easier also if step track store can of of that types ease the of because products to customer, product in. increasing it a this makes or available way feature a cart is these helpful a they often in just the interested clear in. currently is the currently This cart they’re the products protection. online keeping addition as categories, their The available product store. warranty online feature it as of of in launched about use of well manufacturer’s in In further, more any given a Geek a notify as app raises one Taking different customers for the is

up customers’ we for The In an last to want Buy shopping. feature, lines My the the stores use mirrors cart one towards increased app on allows moment million tell the fact, On are this continue of tell use at the bringing and out changing QX, and they have in purchase. their increasingly example offset store innovations annualized in store, We that has who in-store reductions we’ve is up our the ability available and product to stores additional allows closely their between pipeline our cost large they productivity front pickup our our to faster customers our customer. We million them call the to it behavior. fiscal one the to of have QX enables more to customers achieved buying business. the is now pressures items and our Consequently, making fiscal $XX pleasant their that dozens on Way driving cost in Shirt the XXXX customers item we to in shop, is In into and app purchase. help of blur customers $XXX the pick ‘XX are app in-app along the to This usage for of in significantly. our way since XX% of This the with $XXX message Best cumulative continued and their is Blue quarters, and by investments come the already favorites. of conversion These the million. which rolled to experience and takeout of the the of our item pickup goal the local online in focus ready while physical goal how innovation recent rate for with approximately total

investments in management, capabilities, investing that Best chain. platform XXXX our services of labor, a supply enterprise execute necessary to management range specialty multi-year customer As enablers our Most areas as we strategy. we’ve are and in are relationship discussed, Buy them knowledge of are our such

according and pleased tracking investments, are to return. to to beginning plan we on our are see We’re how they

to chain, in seen increase investments more outside located and in center distribution our footage, years. is net a example, two reliance for things delivery accuracy. pads, as which for decreases of the points increases we’ve This XX% supply increase last score new space, as home and significantly due our well metro and close to delivery like in square efficiency on customers appliances So, over basis the metro than promoter TVs large X,XXX

we We our fast speed because and have invest continue to been a pioneer free know how delivery, and to is in in important we our customers. capabilities,

about of delivered day we XX% small third QX, days fee next required. in for So, with membership were in packages were and third a free almost a next and day, no delivered delivered two

their whether one options. right even great significant purchases stores buy want the timing. up shipping away our it of in pickup been the value of also with it picking control simply to in leaders all and have because want We store, online they in is in find Many the or customers

is online more as a have of than of and in-store straight online seven pick-up in revenue In XX% fact, stores. picked now our up quarters we our seen for of growth percentage sales

continuing We invest are in to labor.

Two We’re Number appliances we’ve in-home marketplace. our and smart associates. because investing such we the home. in want in to one, benefit are things and of competitive in highlight. And investing advisor, labor the we in I compensation investments specialty also made, as areas of are

now in last fact, years couple stores the In rate in turnover of over materially the our been low-XX%. and has reduced is employee

Second, the at we in pressure relatively when Investor wage with current expectations had Day addressed are the industry topic all are line the last seeing our year. of trends we we

holistically. Our to approach been has here the topic strategy

leaders caregiver paid reimbursement, excited of during mental enhanced time health progress. roles strategy including us to in key expanded help off announced promoted Best Staying leave, excited are our an human as While associates, for on and employee the topic benefits importantly, advancement, stuff benefits, we is important, And we culture. the offer career creating we the benefits, including are our of including newly we a employees the to accelerate our starting of backup quarter, new purposeful people, as discount selling always tuition benefits and we full-time pay and to course the on both cool of XXXX some that for look part-time paid attractive the Buy and resources. care, and skill unique on of am child four hourly about I at topic two employee employees overall well value incentives of developments, share part-time proposition all employee to and wages, base support

Financial Vice So, first, Chief President, to Transformation promoted orchestrating our and Chief Finance Corie Barry, Senior our for Executive has Officer transformation. responsible been Officer

health strategic addition In to our created now our in Corie technology organization. our team growth finance, newly transformation business, a digital oversees and office,

know transformation to a underscores brings on All expanded as strong relationship orientation of our the and are skills evolving of solution with the an from to major Buy making you course, we and product to a moving need-based as orientation. role. XXXX from organization and this experience we’re Best focus strategy transaction she a This Corie pivot a

has in we responsible Corie, for the to want our business us getting as been Officer business, where Operating to Mohan Mike promoted Chief and domestic be U.S. Second, company. to with of a partnership running

been Best with scope. functions. responsible and Buy including teams to supply As his since has XXXX the services been our you for added channels has all our now and and chain home, merchandising, in-store online, know, and He has marketing Mike

lead to team I their Corie last Mike the this large expanded ways of plans Best and Mike several new personally on Blue and and congratulating for and I know Building strategy on us the New continue our our new want to ability that excited with business. work our and drive years, am in and demonstrated me by work to strengthen the with culture. Buy responsibilities. continuing will I we be very our has to Over his inspired construct growth to Mike to and And complex you opportunities strategy. Corie not as join could implement our in XXXX’s of more ahead changing

Friday their to excited the the a families. Notably, holiday has offer Looking to as May. season we holiday be availability, everything an a offer we customers prepared for Support gaming, destination such can givers all the help, up with for including deals excited thing inventory with shipping and we And customers ensure assortments, includes Tech giftable same Total the and It ago and Black XX product item. number customers last appliances. our released one for What working to us first We this great be about and TVs, to together friends holiday categories and in deals, hour, during great gift This and to we season. two our fast customers growing for retail a our next availability of have day teams Support best-in-class the as Tech again, technology a natural set weeks pages a pickup and deals computing, one free asking Total they’re best and will be This find way on everything as is have delivery and is are set of offer devices, it other immediately product our amazing help matters of ready ensured giving since smart been holiday our compelling launch of tech in-store home across carry. toy and should long, this team loved related plans Once speed. options our delivery be. year, ones, phones, it ad deals convenience we everything best options. course we makes day have large our this to small assortment, ahead, assortment, our will their of holiday put that the

grandparents, We and finder kids, to significant online center the also gift families. parents, and gifts materially gift others just make our for it upgraded easier new teens, right will get our

For our gift Squad digitally shopping find our find Whether Buy gifts their can ready advisors to customers agents Best help in in-home stores, help are list. our Shirt for solutions. our great in Blue everyone Geek Associates, customers and customers stores, and on gifts you’re or

the the opportunities to people’s rate services the beyond like our that them technology in to continue lives. of the connected marketplace. to We of continued bigger and truly GreatCall. become our bring like and approach we technology for us by more to holiday, like solutions, the their range we excited capabilities the innovation lives. in space relationship provide And the we needs, offer their of a have customers and Now, of be opportunity exist We opportunities a address an increasing with them can part health following acquisition expand particularly consultative

like are only results list, sold, Before to total or on billion to tariffs. call thoughts billion over a impact only our their $XXX ways. X% tariffs only our subject latest costs variety key reasons is to about on The small our this our the mitigated is being facts to to I the the XX and affecting this business business, for some the September expected turn rate remainder of share Corie goods that of in is and guidance and are reflected minimal accessories. and tariffs expected the of touches year the and current XX% minimal. about fiscal expected the on be list cost We very a the The the of of review of that outlook, of of I’d it many portion $X.X be products impact is our estimate why in

XX% that year, we’ll course China is on that while of this my increases have on Looking as the situation may three now disposal of mitigate on. not with into this today. two we precisely as linear, I list personal of January our believe the the working the working would update things to effects you to ways is what view team, on expectation effective of current tariff next journey be dynamic a trade the tariffs is vendors at their that you negotiations Xst; One, say the three, continue are And matter. which a progress; with will range together, we and know, to

Buy services New solutions successfully in see in that strategy. XXXX: of significant you by as implementing and opportunity value energized momentum needs. conclusion, are, and technology making enriching performance us progress and Blue lives Best by can generation our the providing overall solve We encouraged with we’re So, the ahead customer continued and Building we real by tell,

to extend they are so, sincere season. I appreciation lastly, holiday for customers want associates this our And to my for everything doing

Thank performance are for turn the like call to I’d QX Corie over You on guidance. and for you our now, amazing. you to more And our what do. details QX

Corie Barry

morning, Good everyone.

about Before saw mobile We enterprise $X.X On I wearables categories. and last you gaming talk them results to top-line of I talk we shared last non-GAAP delivered expectations of revenue in with $X.XX, which versus we billion, our share third our year, results exceeded the quarter would our quarter. of expectations. better-than-expected phones, earnings both versus per like diluted about

only high than Our was provided rate at that a we with Hurricane of partially a a customers by was their while operating with our last to gross right expected the impact of and Michael, income to communities These on year, our continuing offset rate. come decisions do. quarter, performed a we revenue. slightly our driven employees, impact at and by end minor the things had our negative approximately tax rate Compared which a $X.XX of closed. by are to cost guidance work, pay support a last favorable $X.XX but the store was our Florence they employees Consistent volunteer profit the who efforts impact expectations, lower provided to benefit made

a the share, about Additionally, quarter. we $X.XX to GreatCall not last $X.XX share increase and X.X% rate by the an count share of guidance versus was driven now a results per of to revenue by quarter tax a in last net inclusion due EPS $X.X provided Enterprise per talk our was third increase non-GAAP had billion, year. $X.XX effective benefit from increased the of impact which $X.XX or to $X.XX. increased negative This benefit non-GAAP income driven Enterprise primarily $X.XX change. per share lower the primarily approximately included X.X%. sales comparable will I diluted

operating the income program. due was than expected, mainly rate chain rollout our QX as supply Tech costs to expected and than still lower year, Our higher Total Support last but higher of

Our impact shift. a calendar X.X% growth comparable basis-point negative XX the of from sales included

quarters, aligned have are discussed closely more weeks sales comparable following in previous we like-for-like XX-week year. computed year’s are and fiscal As reported not to shifted last weeks, on calendar our

of last compared declines top you on revenue X.X% XXX reported XX the In basis driven $X.XX impact As X.X% our quarter, segment, format primarily $X.X comparable a we Mexico revenue our our points store a year. by of growth foreign new gains primarily revenue revenue XX.X% on perspective, increased was large domestic offset XXX XX.X% was partially Mexico, and comparable basis large-format were was of and XX.X% comparable XX.X% was increased the currency wearables, appliances, year. X.X%, negative merchandising sales This increased comparable and we billion impact. million. online have expect Domestic to In Partially of incremental both, in points over of conversion to growth Canada loss of by of Mobile smartphones. from of third mobile Best openings QX, shift offsetting revenue the primarily phones, our positive last past quarter last were domestic in sales the XX with $XXX with sales. shared driven to X associated traffic. gaming, closures to increased by driven increase online driven year, From and approximately approximate calendar billion. offset On tablet basis, our comparable X.X% sales This year. international increase in drivers by segment, in by higher a by a of Buy in These these revenue revenue headphones, the growth the past category. store partially drivers and largest

of XX.X%. as by gross were higher to the last margin year. and was gross the approximately now of from points rate Tech was quarter by overall which XX were profit last international These our both, transportation Support as gross expense primarily rate pressures profit XX.X% basis line the rollout partially national Turning benefit XX.X% The last well XX.X% higher of included with enterprise approximately profit, the gross was points to costs decline offset domestic decreased offer. of year. we in higher Total XX from supply versus basis driven basis points XX rate flat chain combined The The shared product profit optimization gross of Both our to these expectations of initiative. profit pressure. rates, investments rate

higher effective million The to $X a due a or four, million $XXX costs rates. basis, $XXX due compensation; expense; or revenue The was year. non-GAAP billion of or percentage three, of GreatCall turning last was XX.X% was includes reductions. variable XX.X% exchange our expectations. The the of to the and driven quarter to to $XX revenue rates repurchases U.S. last the in foreign and bond as decreased Now, of of depreciation reform. rate dividends. SG&A tax On last stores our increase operating Enterprise statutory a in to revenue X% versus purposes net the million of flat past cost form million. result and notes From were revenue The fiscal tax partially Mexico was and earlier matured year and of corporate higher quarter. non-GAAP were the with XX.X% for from completed of We a XX.X% $X.XX specialty $X during SG&A new and this revenue proceeds non-GAAP increase in reduction In $X.XX $XXX International that SG&A in we tax from retired returned in expenses; public by opened tax will growth to million $XXX million XX.X% be two, a or perspective, QX, the year to impact effective increases in The favorable last cash currency increased year share of second Canada. SG&A used was lower increased decrease million corporate was October revenue. flow On by primarily third notes investments, primarily million million in and basis, offset Domestic rate due These expense XX.X% $XX year. revenue. a billion XX.X% the to which for XXXX. and offering X.XX% sale labor the or replaced we year. increased SG&A. $XXX due higher constant shareholders line versus primarily the $X.XX billion one, higher depreciation as general ended primarily which incentive was and was due

Our acquisition of on GreatCall previously is communicated our for repurchases $XXX year. million with in to net $X.X cash this to cash existing impact plan expected spend consideration share was and funded not billion fiscal

to with provided This year. Finally, increases the was talk QX our tariffs the which early than in and bring very XX% week would am year, increased the accounts the increased made some to which we quarter. ending of due shifts. product slightly and transportation inventory results our higher balance calendar to compared receipts due increased quarter last launch industry ending and basis, to pleased a international X%, about I our domestic inventory holiday as was in timing expectation in within Overall, to I health weather like guidance. last the inventory. decisions primarily our ending primarily to to due now third like-for-like we pressure our as well season. to response closer On a of approximately shift balance were XX% QX payable These this calendar

EPS third outperformance are revenue quarter. year the reflect raising guidance in for and the full to We our

benefit were plan For portfolio a QX services guidance guidance approximately QX, contemplated on of GreatCall our our implied originally consistent expectations from This share impact call. was last our lower provided is the not in $X.XX that on despite that call our negative is expected. and the with profit from that

a in in earnings week the share. per quarter added and the approximately fourth of $XXX extra $X.XX As revenue last million reminder, year of approximately

is $XX.X shares. international Enterprise range up follows: sales flat to of the X% of flat and up weighted comparable EPS to billion; revenue the quarter sales count XX%; sales and X%; income XXX on our comparable average in billion up of rate our flat to non-GAAP diluted growth million of outlook Non-GAAP diluted of comparable QX additional few Our to $X.XX $X.XX; to approximately comments share as growth X%; domestic fourth guidance. effective growth of tax of $XX.X approximately A

As I shift to mentioned a comparable of is calendar domestic benefit points. basis estimated be sales approximately earlier, QX the to XX

impact see to chain year rate to profit by margins, from impact expect slightly merchandise payment and pressure profit profit partially supply gross $XX points the are million The including a GreatCall. the impact compared approximately profit of optimization sharing $XX year-over-year a last of negative the million gross as offset basis XX initiative quarter. flattish guided higher share lower we from what benefit last and $XX is better We million than lower

by operating year expect to We compensation, our dollars short-term GreatCall’s of expenses. last week extra low-single SG&A offset impact decline partially incentive in the the and lower digits due to the

of million an turn $XXX XX%; fiscal increase represents of questions. increase expenditures of XX%, when XX% XX% $XXX in $X.XX of and diluted approximately earnings the the to XX-week $X.XX, for a Enterprise is Our over in rate capital basis; non-GAAP to effective operator sales non-GAAP fiscal XXXX’s XXXX of rate tax $XX.X billion; to compared share income of to full-year range at: rate will now call comparable to approximately the the on million. which an $XX.X to guidance increase now XX% operating income basis; stands to of billion non-GAAP on I revenue to of X% range a X.X%, XX-week X%; flat per to this enterprise a approximately

Operator

Thank you. [Operator Instructions] with from Our McShane first come Kate question will Citi.

Kate McShane

question. my taking for Thanks morning. Good Hi.

I picked of you that big product is your being was the and prepared One your for in more put initiative of statistics retailers. you a of that’s lot comments know in-store, a been guys that up and

products, leverage the forward. just their store can So, walk us customers expect contributes I wondered you as could through the up and contributing to how to that pick we going if you as that and profitability come overall how

Corie Barry

how other do continued this the the but the the experiences difference in is channel ways And we’ve to That various like very caveat combination And, been make this their things difference instance. as we’ve to and over online less site, profitability Kate. the us question see overall has that lot how to But, actually time. it has necessarily a channels because customer’s on pull is, our trend about, the merchandise we’ve time. actually that between the evolving choosing profitability kind apart. hard one up of which with part reason straight what in both is for we Yes, And business, it’s of come a exactly between think to about seeing. that a channels talked things in about, in the in every you this flavor on the to of been home always profitability of their particular the the also that wanting improve channels versus own our in the shift of over talked pick

of profile. big has more part we profitability robust our definitely helped about is create what a This when talk us difference is channels. this lesser online a of of So, profitability the part between the

Kate McShane

if a your and early any about couple to portfolio it’s learnings if there other regards days, about GreatCall. it’s going know should can been of early forward? unrelated I of been been I one only your we M&A But, part with weeks. ask just since I wondered And question just think how strategy have

Hubert Joly

warnings? early Any

Kate McShane

Learnings.

Hubert Joly

you, Thank Kate. yes. learnings, Oh,

our the extensive completely the is of When strategy a important line strong. we are cultural missions really acquisition. and we very small did, that addressing to alignment have due-diligence it’s the particular, fit. company, key really we team ensuring The we company of very, acquired, our commend in human acquire GreatCall -- I needs. with the for in very yes, excited about So, It’s

So, a long the all not pre-signing lesson done we’ve for Kate very positive. smooth was -- very has in preparation of and because us the acquisitions -- pre-closing ensure of maybe integration time, all a been to

are about other seniors we the that excited home The through for ever us to longer their for stay lesson in more is this. us aging help technology, opportunities than

priority flow first -- of our wake in our we gives inorganically. invest about success course And No, improving done? confidence strategy acquisition, allocation very, to lot oh, more. there God And to what we’re we’ve paying said business cash And was positive we the of this to us sometimes, attention organically do because an you that in have increases a acquisition capital both feel this up my and the this. very after

level very good. are I our really GreatCall And the add? listening, working to you of feel our so, very great member salute take would opportunity teams Corie, together, so anything And want team, good. of to is excitement anybody well from they’re

Corie Barry

add unintended just messages. financial one that would send it so doesn’t I more clarifier,

expect the still XX-month and working We -- to part the obviously excited call But the team. be to impacts which what more is a our with which we in can here this. of that with is are plan are can that meaning as out the And can do on I'm balance hopefully together, life. about the dividend overtime of together, customer then, you to impact for we test heard One, have life acquisition customer is very going and the a pays business. neutral some Those We couple their of revised us opening do more means early be and customer problem, me basis. acquisition of the an about we QX. you happen sheet like acquire on a high two, anytime customer assumptions, early here things a acquisition believe some we QX in some costs have accelerating we're call

that that's want than So, just of to a differently sure timed quarters. performing amongst the business understand out is it bit that not we make I just how it's thought, people

Operator

Our Stanley. Gutman Morgan Simeon with from question comes next

Simeon Gutman

the Congratulations, QX. morning. on promotion. X for is to guide Corie first zero and on Good question the My Mike

on reiterated when suggested product sure some same some you you anything didn't you about of zero consumer from The started the Corie, had favorable of if X shipping have but and call. will apparently in, the you surprised they QX thinking competition And around What's is changed have. factored the Hubert I'm sort actions and little, seems to now? fine, maybe the then at Amazon was to competitor sort think least you’ve since I curious backdrop. a then I

Corie Barry

in this of And evolving. Not I and is year talk mean, actually the always that look, about it's the consumer competitive of much particular time price. the so things one the we QX it behavior than the the of bit even how of a often we we think in year. little how pretty different consumer, how about the for is the think marketplace about environment rest

we are we there we continue our a same but as even very and competitive been changes, Apple about and that a advantages hum [indiscernible] and the everything time, marketplace. And about both what absolutely we our little the can how QX. to feel Apple bit business maybe also into have in and right think doing yes, we're the that at Hubert we our things strategic on You're own account can continue to a of some thinking accelerate well bars take we Amazon? do with in products And positioning consumer few to see placed a with own

Hubert Joly

years the the say for thank -- Best products over Apple, and as excitement. colleagues longstanding the Amazon the built experience experience congratulations a provides We’ve outside -- you had would Yes. Amazon that Apple two and unique a course. home. We’ve my -- own to of retail you and their Apple know setting for Buy best of pricing. with with We've their services sharing relationship very

XXX you As showcasing the do stores services. great within stores and we they a know, of products our have and job Apple

authorized the standpoint, been service I online Apple and we've since largest And the We sales service years we are think ecosystem products. it's third-party [ph] this, have agents AppleMasters -- of largest that been X,XXX Care consultants third-party is Apple over includes we've provider for Apple experience doing our a [site] Apple years, experts stores the and from and built employees. in the and

always customer focus our unique a been and building as on experience. company So, the has customer a

announcement I not. been always laptops Amazon Amazon pretending including has what think, to for the -- first-party the selling products and Apple

that to be. one with advantage And is make Apple our a our or themselves, net key the the course, focus at reduce number sure is third-party on will it’s on continuing what innovate to enhance competitive the a effect continue the of massively the marketplace. unclear this sellers. work and selling And in they'll point customer we is to they watch, partners, the but understanding phones of start vendor Our going have experience

a think what including quarter been to with media phone. in ago. to zero we’re I X% the is customer line the a we’re our that but serve probably QX guys lot it's to the you sticking every perspective and about on know, I said things, ready in there’s So, on noise a of we -- had lot of

Simeon Gutman

for maybe Hubert. follow-up My Thanks. you

on thinking of How bit Plus put of you just phone share if customers, And Buy, the a mobile buying like are you your through category, as Best percentage a what them you it? business. do drill I’m to a a just Just us, primary down mobile look the sort then, can as around purchase? fortress with Elite shopping like at

Hubert Joly

you So, Simeon, -- business your more mobile business. little you not fortress your the question on building build said, we’re the tell a fortress the question. because bit, So, around mobile Can in elaborate about me business?

Simeon Gutman

that as years have taking customer show Buy phone, share a Apple how years whole. go Look, as do survey keep be that think which Best the customer from on? you seem through of the captive that couple their Yes. well Stores sort to as we as upgrading I the to renewing some buying, research ago, loyal a

there’s competitive more Amazon so, become entrants, if does you first phone. a if And party seller some now, will, of the

that is customer how to just the customer and there you the So, of what keep the do business? importance

Hubert Joly

Mike, to great. and start will I will you elaborate then that want if would Yes.

investing particular through of seen stores been our part initiative for Mobile business, in significantly have And that the in XXXX. that stores. our in you the in We have

a are compared other with large very or Buying is to when phone complex items And the a that’s complex the selling So, players, we either experience. do partnership buy. in actually carriers. well, to that we’re

-- a a that’s strength. So, it’s

in And had in processing buying promotions these to menu making the systems shorter. clear invested boards to to it were. so, for streamline it stores, customers make the We’ve the what we’ve know

course, stores Of Verizon, a fact the unique AT&T is that Sprint in our advantage. and we have

of labor increased have We associates, and associates. carriers’ own the and proficiency both the associates the our

course, and Google. We phones, brands of the Apple, Samsung, increasingly have, display the of major of

unique that’s So, experience. the

Now the we category have that highest being said, share. now phones market is where the

And advantage, Apple our options the of did what carriers. but continued lot the a do experience. we an you our have investment and momentum to add there’s Mike, and customer this? good feel So, about in

Mike Mohan

is, so with What want Hubert Thanks, you, Good their to to to phone talk is said people Hubert. complicated, I our would business to complement carriers. think add what Simeon. a about relationship the

believe can is their very you can that done do to stores upgrade we whether can and simplify with iOS compare the you online, probably truly Android they that And statistics know purchase, ecosystem with ecosystem. it. an want Buy’s and other can your Best when plans plan objective to expert, an other compare we a review to even about in to I that or though do thing to phone talk things us, keeping -- the we’re longer try one or their is better the it’s still you you experience, they’re our actually qualified around so, delaying consumer than And and means carriers,

quarter devices of their key thing keep in help the well. consumers [ph] is are do a Apple this that longer. need out can amount rolling are repairing stores we Glass as more as we they with So, to This going

what a we customers that as look think their for at an different own I So, e-commerce can than that's can we for do handle distribution stand Apple on stores. only even avenue what or

Simeon Gutman

Great. Thanks. Good quarter. luck in the fourth

Hubert Joly

you. Thank

Operator

The from Advisory Telsey next comes Feldman question with Joe Group.

Joe Feldman

by I was for tariffs shape causing front bring you a taking the guys. wanted early inventory, of sounds others Thanks Hi, the know or I did it's to more a was in to like receipts? can guys logjam about in at share you it year there? and again. tariffs, little What trying related created the the turn or it get to it the of color ask like question. forward. Was good

Corie Barry

Yes, absolutely.

of trying I'm make let that just about call in XX% we XX% calendar the sure just I'm due weeks. first of to Of inventory, saw to part, clear. So, the me that XX%, was that it try shift increase

in so literally, So, the week here. to it much calendar because weeks line makes, once inventory you much up you difference how each bring

increase of to the have overall but and not especially more companies ports and in bringing some some more a line typhoons tariffs in yes line then And delays also have X% proactive weeks, the of out leads being spotty. calendar things sales lot if I the caused So, There due made areas, activity quarter. first lumpy with just all, that both due more some the inventory, deconsolidation [ph] of has of been of to we that weather and a out up even clearly the just of some happening second decisions. all the literally in of

people sure teams you of were so, well phasing of in to really prepared planning absolutely that had, give it. for largest one that make that mean, to felt it really And bring ton the we demand working in would inventory availability. so for that early NPS credit we a as I have to is I continues important drivers like it want hard inventory we've that that in. our have us stuff And be we inventory

given in fresh payables well. the see new as it's can balance the You all increase basically and corresponding

Joe Feldman

then, you. Thank And just a follow-up.

looking any but Have think the if you you they've for can -- a might you another think can that there the or there, quarter, better guys season? key started As sooner know I or current big comment seem any give getting any least be you the or at you any about the winners response? holiday you're products it's there season, seen season for or is obviously and like color are the catalysts on this promotions holidays that asked particular way, sooner.

Hubert Joly

of about There there things is one is excitement that is categories. is -- across innovation. excited slow different many, set an I'm continued And many what's the that holiday. amazing the that's category this such about products And for of exciting holiday this the great which

and Duty, the There Ops big to X I X Black particularly think TVs, is Dead hot. So, gaming smart with Insignia and Smash with speaking, great going And Red voice devices, TVs, assistance continue excitement with of additions. But partnership Nintendo, the to to number people be of Super of of XK titles, Amazon TV a a be moving lot is item, and screen. Redemption USB Call a there a Toshiba have around screen larger Fire TVs. course Bros; broadly we streaming

item. big a be to going is screen So,

voice lot year, there. a news; And is new here functionalities a few If with of assistant good one I can have kitchen table, a you on screen. bought a a last buy my you

New the appliances. mixers, been doorbells. great gifting I’ve year cook, of is has this but Fitbit Appliances, heard, and a phones items a of health, and pressure across then of excitement, small number Apple. new that both of don’t great cookers, than a lots right, more -- been I lot phones, for have ever there [ph] launched major promotional There before security time is I appliances think -- appliances,

of for excitement a or is there our So, stores us or people shop come to again, lot online to with you. come we’ll to

confidence, So, general that’s entire care course And take one is of this there’s can about of of your of lot list. there we reasons. holiday, the a reasons but excited the consumer we’re why

just trip So, you’re one and done.

Corie Barry

promotional make Joe, to I it on is specific earlier our the years; own guidance we cadences that we QX. environment. season the competitive our the that over mean, few as around account we’ve think been the earlier, so give question hit we last it’s definitely reflected to in start seeing competitive -- in sure in have taken is just into we could, I I your phenomenon for own positioning and something you best

amazing to to as to team continues does continues feel -- always change, this to about season holiday this really to And we to and so, an how differently, make have holiday of talk the shape evolve. amount a compete work continues that we -- continue sure that prepared we it

Operator

Oppenheimer. question next Brian with from comes Your Nagel

Brian Nagel

off, Corie responsibilities. in your new and Mike First to congrats

Corie Barry

you Thank

Brian Nagel

of their how Buy? this, to homes, look benefit is in one, have So, Is better a of Buy as the the -- comments, what reflection add-on the the encouraging And the to where business buy in pick-up customers strengthen. comes Best talked that the regard to versus a this, something natural for overall that store? part in you’ve that more is as evolution shipped market? of it are, I with you online I’m is to then, at it The customer prepared online is or for at that far about of as your product -- Buy Best looked as continuing sure store, questions business a this to the sales you pick-up there profitability -- maybe store is having the and Best the customer benefits chooses or doing

Hubert Joly

Yes.

first the point, customer this on choice. the is yes, So,

to the going customer-obsessed customer-focused, try customer. the make for to a As not decision company, we’re

There benefits we app, site So, is the store. in or customers. in if incentive picking financial you the the on really up or the prepared it’s no customer. That’s look up really is in the one to said other, remarks. of unique way what our There it’s

get You in an it can hour. less than

the U.S. want is get Buy the to to at a then, want up it within speed population your home you don’t during store. minutes you going could not may So, a XX% crazy, show lives -- to of And XX of pretty if say, have gift and when control holiday, by knowing that whatnot. it’s Best you gift way you’re the

-- had And experience, you to so in We Mike, topic, any to invest Buy, customers been opportunity the we add? this is good stores. systems, So, help benefits they’ll on in as but choose because process, in can if the which the our of love what with and invest opportunity is it’s get Best and tend results. items, this and customer to additional not to long, questions, them there’s seeing it. we’re really a the to customer-driven or this The really have to to the labor, experience. overall see the stuff driving the the for possible is invest best the we’ve buy shipping, in we’ve there want And Corie we phenomenon. more improve want we well, course, customer doing

Corie Barry

No. That’s okay.

Brian Nagel

helpful. very That’s Okay.

repositioning follow-up forward, Just on I thoughts Mobile of positioning real your you estate what had Any in forward how one the effort on your stores obviously expect going repositioning. some to Best expect closed quick then release, should we see you estate, too. Buy stores guess, that to topic going question. the of -- or real we mentioned, larger With regard and format

Corie Barry

consumers we're positioning, about our and of just therefore those which going we and We've to leases real to that importantly all you're the And the the But, positioning. every sure down year. those the do consistent been the in and estate number any stores, per a best right making try continue think see on we year, in now get see how is market XXX very markets leases every understand serve refining We're but change the you're market decisions for also make stores, massive we're a not markets. speed to to up, pretty looking going to we don't at lucky overall not best we're see seeing positioning. of I to

footprint like us just the You're sure to in by reflects see feel the market make going we of market. to consumers continue needs the that that

Brian Nagel

the of Alright. Thank luck you and for best holiday.

Hubert Joly

Thank you.

Operator

Consumer is question Schick Edge Research. from David Next

David Schick

Hi. Good my morning. Thanks for taking question.

suite your near-term at looking with does of about latest sort be going tension or historically several this or front of vendors? what like of is if of holiday product look the services, cycles announcement going like, the So, the store front store, your competitor back and on, discovery next could and in products for conversations you've guess, there these of how business. the look yet, to is what thinking at seen products there haven't those, temptation products? to those there you have but been have you of about announcement, is What are neither that are it of more what years? about is it's that maybe talk we always When Apple, that sort talked helpful other consumers, would things then, a over I whether Amazon go

Mike Mohan

know morning. can around starting or Hey, just what I think The about evolution for their you’ve Assistant David, the We're wellness. and evolve. And version our without that about great home to them to the people surface That's do seen I think and it's think what people screen, with our of a Good health continue is Mike. because them. that connected a understand both morphs to about. question security see ecosystem product you as screen, in talk in to trying shop have scratch assistant, biggest they can it to into stores own personal going Digital technology, you're connected

of -- interest one at estate. starting see going do these do of are to current our next and to is an customers lifestyle real a just leverage move you spoke you're show at is our solve both and as we And chance Hubert, few and can I our exciting more what wellness, who to to So, think we Investor stores to them into tremendous able health front from add to and know, members emerge vendors team There be Day, that what and needs do anything? try you have specifically of see the truly amount the years. those get about don't to we I want around security.

Hubert Joly

within that what innovation; around other product and it, stable never come categories build growth The there at things by there from there know stand update continue customers, specific to to And always there opportunities with in experience their go opportunity impact not but this of solutions, life. relationship a to imagine what's imagine we growing we our pretty particular that through key the relationship categories aggregate And is a opportunities we obsession in the is that customers. then to cycles always it's customers XX%. of next needs, wallet, increasingly going the knowing opportunity fact that discussion not. driven wallet build the -- the so forth. to product The look whole customer is kind is and the a And being cycles, the the launch; you us share a basket you understanding of always is look is of driven [ph] updated while third. guys equity customers back your buy. for to to that. the we'll way and growth discussion ability The expanding customer of specifically that sell and the and of by - genre, thing to story forecast, of this this from a it's really different a to we the as portfolio But, but and customer, the year, that’s course hardware that’s have as and way existing A a quarter targets of is is with share have, the product services, goes bringing not we is and part a from opportunity, I around standpoint at

that’s ongoing So, key getting role; people’s in a these Support home Tech into in on that’s Total way plays to advisor opportunities. a basis; space be why why gives as lives an us house the that’s

the looking if of very to customer expansion look to last it’s exciting, time, but or grow this ability two is going And back exciting. the the very, take opportunity driven you relationship. very what’s a ourselves. year the at the It’s demonstrated we’ve Company growth So, by and now comp ahead is

David Schick

Best Buy of this, say -- consumer? will part the to will past, as in be is what be the as to fair it has been Best is there present exclusive And it there

Mike Mohan

always a fair and great them, I part think ability about do that do will products opportunity making is consumers will what curated market and assumption. of with that that, provides talk and our David. We that know to solution be ensuring for the us to a

Operator

Matthew with comes from Barclays. Next question McClintock

Matthew McClintock

questions. quick Two

into X, making, to first question. earnings, as Corie, a what wondering, could of making lot beyond? just on flow been for investments the wanted that investments investments XXXX I be one, would thinking we as potentially look well. first plus through about The Hubert, business my to And that you of did that years. a and you That talked made buckets be bigger was are need X forward, you’re you’ve the in

Corie Barry

larger Yes. few a There’s going more different and ongoing when in I’m suites both in what it slots at of about we Day, a Investor a it little bit pressures. about talked investments of to that And talked investments are call we nature.

ongoing, our is we Hubert term in I really second And think that experience. like those our was investments three, we are are come our a to our that smart from were wages invest. a we prepared about things to investments specifically to those is our outlining make be for in believe of use said and stores, space important for that refine experiences specialized experiences, experience journey and his our us It’s benefits at-speed in-home efficacy as plan, very where list did f on in that’s investment range digital we in the Hubert then over in investment areas, longer those those multi-year remarks. better nice well a area or knowledge why builds, will going infrastructure. space including to from that things a we employees. we’re job tools so, making our that going time again major what like products. ongoing we terms going continue and CRM, talked required suite smaller as ongoing to the to investment -- and about management, that that’s come help help our and going tools home larger have worked product, to and the like that be And of to be going A we about of talked facilitate as easier talked better And will and required very people, or broadly That call things also you both us. we to investment our as in that on of continue customers longer deliver our our chain in both a is And that longer technology to capabilities, in clear be journey term a advisor about and were to major the supply again an associates in is a the

committed term these it’s those all we things said teed longer Day So, part as of Investor have of the well. the and and going the reduction of we part are to at so reason reason up cost and side remained be the pressures of investments

Matthew McClintock

question theater and excited Hubert, listed quarter, quarter. holiday, the it you second see home last the really category options about ledger on my just for then, I theater. comp didn’t home is And the this sounded but

there holidays? mix trying into just what TVs this as Is understand we sales I'm a a to at theater to Thank size, to So, bigger from offset your of pressure TVs. we higher increase up ASP as home lot to in still go mix benefited the bigger room holiday, to trade happened quarter? you. you And look

Corie Barry

bigger Now, there room TVs. to is some always

of call One QX. a saw saw bit QX. in we in like what the what TV a the compared saw industry definitely of we bit more little moderation I’d to -- in we

bit. see So, good to great and we larger clip; news experience at TV to we that we to is more -- up is, the want would really this units that with concept bit. The pretty and those technologies. keep Good is a is genuinely XK it different in and which is part TVs. but to that a And to, technologies, excitement a caught cycles specifically the bigger idea this continued falls into, alluded get better cliff. It see slowed mix down to props up this that what customers your a around people up continue ways kind get what their continue And off of be one we nice question, you ASPs larger TVs in new automatically for providing home. of in people

heading And we bit and quarter, be holidays it last the a to very clearly so, yes, moderated into well a it's the from but feel hot going prepared. item

Matthew McClintock

It’s -- Hubert. ahead, go sorry,

Hubert Joly

time I was for we more. Mollie, wondering one have with

we think I do, So, right. all

Operator

question come Deutsche Mike last Baker with will Bank. Our from

Mike Baker

guys. Thanks, Hi.

a way well mark to I year? to relative on billion guess little up, if what but it, a because don't the me this. be that come in, just translate to you're you're analyst you be would bit to plan operating hitting of And by to to similar that margin this I out a why this still few going But, prepared day referenced, you question guess, not? you're there. last as into or necessarily Does beat suppose the if $XX talk to know your it longer year, then operating I term you're going if XXXX, below looks sales I So, margins not the that about about and going laid we think maybe is should you -- should that

Corie Barry

this to we're and to the to alluded here So, we sure of our get We're fiscal we focused future feel for this business once the the fiscal what think on that us set up deliver as focus. we that rest to end and in we then, of way is right year. make absolutely our the we we'll idea invest this success for we of a future sure be year call, continuing out the on it that everyone the you that, on update through And it's year what out through looks I made remains What what on implications help year. of the in said to we going get updated. commitments like this financial making finishing should how going mid-term we for now, and outlook

Mike Baker

is repeat some might and I the least for to products? store sustainable is of in last to that that, to going sales row. services the a second not X% at that growth strong end are the How in much need year replace really products couple of as a due accelerate guess, for follow-up how to up I'd being ask, years same you

Hubert Joly

So, I obviously trend. excited very about been that the we’re able fact to positive we've this think demonstrate that

for update Investor relationship on We of relationship, we’ll is course the the lower that in the call, business. customers. our the at we’ve about is point the been the our sectors expansion think. As year environment the cycles Day an our big than to the we'll excited of product QX customer said, operating on this much but And actually us the which call. provide earnings provide and volatility main Corie future demonstrated of in for very with long-term We've the like people -- versus theme updates QX opportunity

We apparently incredibly So, were with to say like know, I the retailer least. wrap. not reporting I’d an you. busy today, this, only day for all is this of the to maybe

fire, very And focus is by with friends population increase your is heart happiness, wish We our So, with way one Southern family holiday. of many for I so word in I so to thank you of both happy those in the California Northern to sure safe your California. much all impacted your the know say and which a very list one attention. I’m want because you and us. to are that and

Thank So, our much for so or forward you. look with forward months. you to seeing your stores and you up attention online. look to Thank you in three in catching

Operator

Thank you, everyone. concludes teleconference. This today’s

You may disconnect. now

Best Buy (BBY) 20 Nov 182019 Q3 Earnings call transcript