Best Buy Co., Inc. (NYSE:BBY) Q3 2018 Earnings Conference Call Transcript

Nov 16, 2017 • 08:00 am ET

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Best Buy Co., Inc. (NYSE:BBY) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
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. (Operator Instructions)

I'll now turn the conference call over to Mollie O'Brien, VP, IR. Mollie, please go ahead.

Executive
Mollie O'Brien

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

(Forward-Looking Cautionary Statements) I will now turn the call over to Hubert.

Executive
Hubert Joly

Thank you, Mollie and good morning, everyone, and thank you for joining us. I'll begin today with a review of our third quarter performance, briefly discuss holiday and then review some of the progress we're making against our Best Buy 2020, Building the New Blue strategy. I will then turn the call over to Corie for additional details on our quarterly results and our financial outlook.

So today, we are reporting strong top and bottom line results for the third quarter of fiscal 2018. We grew Enterprise revenue 4.2% to $9.32 billion, which is a 4.4% Enterprise comp and we increased earnings per share 30% to $0.78 compared to $0.60 last year.These results include the negative impact of two significant factors. First, despite what we characterize as moderate expectations for mobile phone launches in the quarter, revenue in the mobile category was materially lower than expected. This was due to the fact that a major new phone did not start selling until November, which is the first month of our fourth quarter. This resulted in significant softness in sales of existing mobile phone models in October as customers delayed their purchases. The related revenue impact in the quarter was more than $100 million.

Second, like most retailers, we felt the impact of the natural disasters in South Texas, Florida, Puerto Rico and Mexico. Our first priority during these disasters was, of course, the safety and well-being of our associates in the affected communities, and we're happy to share that all of our associates are safe even though some of them suffered material losses. We estimate the negative impact to our Enterprise comparable sales was 15 basis points to 20 basis points, and that with the related costs, including insurance, deductibles, repairs and employee-related pay, our earnings were negatively impacted by approximately $0.03.

Now despite these two factors, the results we are announcing today are within the earnings guidance we shared in August and are strong in absolute terms. Earlier this year, we announced the launch of our growth strategy, Best Buy 2020, Building the New Blue. And well, we're growing. In fact, year-to-date, our revenue growth rate is 3%. This is materially above what we had guided at the beginning of the year.Technology innovation is fueling demand, and our strategy is resonating with our customers and while we are investing in key initiatives and capabilities, we're also able to generate significant returns for our shareholders through the growth of our EPS