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Best Buy has blockbuster holiday season as pandemic changed consumer habits

Nicole Norfleet, Star Tribune on

Published in Business News

Best Buy had a blockbuster holiday season, with record online sales and a nearly 10% increase in fourth quarter profits.

The Richfield, Minn.-based electronics retailer saw online sales increase 90% to nearly $6.7 billion, lifting overall revenue to $16.9 billion, the company said Thursday. That's an increase of 11.5% over the same period a year ago.

Chief Executive Corie Barry said the year of shifts in strategies because of the coronavirus pandemic has permanently changed Best Buy.

"We managed through the impacts of the pandemic in a way that allowed us to accelerate many aspects of our strategy in order to thrive in what we believe to be a new and forever changed retail environment that is even more digital and puts customers entirely in control of their shopping experience," Barry said in a statement.

Barry said this fiscal year will include more investments to "push even faster in our evolution to a digital-first mindset."

The strategies moving forward will touch everything from technology, automation and analytic capabilities to health initiatives.

She said the company also will continue to experiment with store formats and a "more flexible and cross-trained employee base."

Since the holidays, Best Buy has laid off about 5,000 employees, mostly full-time, and added about 2,000 part-time positions.

 

An unspecified number of employees also had their hours reduced, they told the Star Tribune and other news publications.

The company said earlier this month the move was to achieve the flexibility to respond to changes in the retail model.

Throughout an unprecedented year that was mired by the COVID-19 pandemic, Best Buy rapidly changed its operations choosing to temporarily close its stores to traffic last March and offer curbside pickup while later reopening in stages. In the fall, it began to alter its fulfillment strategy turning about a quarter of its locations into store hubs meant to handle more online volume and redesigning a handful of stores in the Twin Cities to decrease shoppable square footage and experiment with its fulfillment space.

Net income for the fourth quarter was $816 million, or $3.10 a share, up from $745 million, or $2.87 a share, in the same period last year.

For the full fiscal year, same-store sales grew 9.7%. Total annual revenue was $47.3 billion. Profits rose 20% to $1.8 billion.

While the company did not give its traditional financial guidance for the next fiscal year, executives assumed sales could range from falling 2% to increasing 1% as they predict customers might resume to spend in other areas that suffered during the pandemic such as travel and dining out.

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