Best Buy finds more inventory on hand drives sales
Best Buy has been on a roll with a same-store sales gain of 7.1 percent in the first quarter following a nine-point comp gain during the fourth quarter. Among the keys to the consumer electronics chain’s success has been its inventory management.
Speaking on Best Buy’s earnings call with analysts last week, CFO Corie Barry applauded the company’s inventory and demand planning group for “the quality of our inventory,” which she said was reflected in the chain’s net promoter score.
“Customers are consistently telling us one of the big drivers of that improved customer experience year-over-year is inventory availability both online and in stores,” said Ms. Barry. “And so, I feel very good about the targeted quality of the inventory and then also the levels in support of the business we’ve been seeing.”
Best Buy’s inventory is up about nine percent on a square foot basis year-over-year. The chain is in the midst of a multiyear effort to transform is supply chain, according to a Wall Street Journal report. While the chain’s management believes the investments being made are critical to Best Buy’s sales success, analysts are watching to see if it delivers the returns investors expect. Supply chain investments and higher fuel costs are expected to cut into profits by 25 basis points on a quarterly basis.
- Best Buy Co, Inc. CEO Hubert Joly on Q1 2018 Results (Earnings Call Transcript) – Seeking Alpha
- Best Buy Reports Better-than-Expected First Quarter Results – Best Buy Co., Inc.
- Best Buy Reports Better-than-Expected Fourth Quarter Results – Best Buy Co., Inc.
- Best Buy Keeps Store Shelves, Distribution Centers Stocked – The Wall Street Journal
DISCUSSION QUESTIONS: Do you see demand planning and inventory management as a competitive advantage for Best Buy? Where do you see the biggest opportunities for retailers to improve supply chain and inventory management practices today?