Corie Barry: Best Buy Is Excited About Holiday Plans, 1 Million Seniors Now Using Health Services

By Amit Chowdhry ● Nov 27, 2019
  • Best Buy CEO Corie Barry and CFO Matthew Bilunas unveiled the company’s results for the quarter and provided a forecast on a recent call. And they are “excited” about the holiday plans.

Best Buy recently reported its quarterly earnings and it indicates that the Minneapolis-based retailer is poised to have a big holiday season. The U.S. comparable sales increased 2% in better-than-expected results due to stronger sales in appliances and consumer electronics so Best Buy raised its full-year profit forecast. Plus Best Buy reported a 15% growth in online sales.

“We are excited about our holiday plans,” said newly appointed Best Buy chief executive officer Corie Barry. “Our teams have once again put together a best-in-class assortment, prepared an amazing set of deals and ensured we have great inventory availability.”

In a previous quarterly earnings report, Best Buy warned that it would be dealing with general uncertainties about the tariffs. However, Best Buy chief financial officer Matthew Bilunas said that the company is seeing improved expectations for the current quarter, including the holiday season.

Best Buy has made improvements to its logistics in order to support faster order processing and delivery. And Best Buy now has free next-day delivery on thousands of items along with new pickup locations established within CVS and UPS stores in New York City. There are plans to expand this program outside of New York as well.

Another major initiative that Best Buy is focused on is the diversification of its services to reduce its reliance on consumer electronics. For example, Best Buy has seen growth in its technical installations services for Wi-Fi and smart home devices. But more interestingly, Best Buy has moved more into the healthcare market.

By further penetrating into the healthcare market, it would help drive Barry’s goal of driving the company’s revenue from $43 billion in sales now to $50 billion by 2025.

Earlier this year, Morgan Stanley analyst Simeon Gutman estimated that Best Buy’s moves into healthcare could drive between $11 billion to $46 billion in the company’s long-term revenue.

Best Buy’s goal is to provide health monitoring services to 5 million seniors within 5 years. Currently, Best Buy has 1 million seniors using its health monitoring services. To achieve this goal, Best Buy acquired personal emergency response company Critical Signal Technologies. Best Buy also offers Five-Star Services to connect customers with agents who can send emergency support.

“Today, most of the seniors we serve are utilizing easy-to-use mobile phone products and connected devices that are tailored for seniors and come with a range of relevant services,” added Barry.

GlobalData Retail Managing Director and Retail Analyst Neil Saunders praised Best Buy for its ability to pivot to strategies beyond selling electronics.

Moody’s Investor Service vice president/senior credit officer Charles O’Shea also lauded Best Buy’s performance as “very impressive.” And he credited the company for “holding its own against the likes of Walmart, Amazon, and Target.”

The areas where Best Buy saw slowdowns were in the sales of gaming consoles and home theater systems. And tariffs are still a concern for the company as it is would be highly affected if the 15% tariffs on Chinese imports are imposed on December 15th assuming that a trade deal fails. Around 60% of the products that Best Buy sells come from China. The company’s updated forecast includes the best estimate of the impacts of the tariffs.

“The company has definitively emerged as the poster child for how to not just survive — but thrive — while competing against Amazon,” commented Loop Capital Markets analyst Anthony Chukumba in a note via Barron’s.

Wells Fargo rated Best Buy stock market perform with an $85 price target — up from $65. But Wells Fargo also cautioned news about the tariffs.

“Q4 will be telling with six fewer holiday selling days, a ramping promotional environment and tariffs just beginning to enter the gross margin line,” noted Wells Fargo Securities senior equity analyst Zachary Fadem via Marketwatch. “Looking further ahead, we see reason for fiscal 2021 optimism on an improving product lineup (5G, 8K TV, gaming consoles), and easing compares, but in our view, tariffs remain the single biggest sticking point for shares today.”

Read more on Pulse 2.0:

Best Black Friday And Cyber Monday 2019 Deals