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Best Buy Q3 Entertainment Sales Rebound

16 Nov, 2017 By: Erik Gruenwedel

Best Buy Nov. 16 reported same-store domestic entertainment sales increased 4.1% in the third quarter, ended Oct. 28. This compared with a 9.4% decline in the previous-year period.

The Minneapolis, Minn.-based consumer electronics retailer said the entertainment category, which includes Blu-ray Disc and DVD movies, TV shows, music CDs, books, video games, hardware and technology toys, accounted for 6% of domestic revenue, or $510 million. The segment generated $492 million in revenue a year earlier.

Indeed, Best Buy aggressively marketed select packaged-media releases in the quarter, including Steelbook packaging with the 4K Ultra HD Blu-ray versions of Sony Pictures Home Entertainment's Spider-Man: Homecoming and Baby Driver. Best Buy also offered $10 in rewards for My Best Buy Members with preorders and purchase of select digital and physical video games.

Wedbush Securities analyst Michael Pachter said the results underscore a “nearly complete” fiscal turnaround for Best Buy.

“Management has done a phenomenal job aligning spending with revenue, kept gross margins relatively high, and aggressively repurchasing shares,”

Pachter wrote in a Nov. 16 note. “On the basis of its past performance, it is difficult to find anything to criticize about the Best Buy story.”

At the same time the analyst remains concerned about what he calls a “looming death match” between Amazon and Walmart over domestic e-commerce domination, Pachter believes the two retail behemoths will maintain relatively high pricing on consumer products over the winter holidays, as they did last year.

That's good news for Best Buy, which saw a 22.3% increase in domestic online revenue to $1.1 billion. As a percentage of total domestic revenue, ecommerce revenue increased to 12.7%, from 10.8% a year ago.

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