The dreary results cued up the usual questions: Is traditional retail in freefall? Are these stalwart chains toast in the era of Amazon.com Inc.?
But as Best Buy Co. Inc. showed us on Tuesday, the answer to those questions is: not so fast.
The big-box electronics chain saw comparable sales rise a robust 5.4 percent in the quarter from a year earlier, thanks to increases in many of its key sales categories, including mobile phones, appliances and smart home gadgets. That was its biggest gain on this measure in more than seven years. Online sales in its U.S. business jumped a solid 31.2 percent from a year ago. The company also increased its earnings and revenue forecast for the full fiscal year.
Investors were far from impressed with the results, sending the stock down nearly 10 percent in early trading, after it had closed at an all-time high on Monday.
But one thing is clear: Best Buy managed to make real progress this quarter, despite being in one of the most Amazon-exposed categories in all of retail. And it made headway even as Amazon threw it a fresh challenge, with the e-commerce giant striking a deal with Sears Holdings Corp. to sell Kenmore brand appliances. Also, don't forget Amazon's big Prime Day sale fell during this quarter, meaning it was dangling big discounts in front of shoppers for all sorts of gadgets.
Of course, a single quarter of particularly strong results doesn't mean Best Buy can rest on its laurels. CEO Hubert Joly even warned investors on a Tuesday conference call they shouldn't consider such robust comparable sales growth to be the new normal, which might help account for Tuesday morning's stock decline.
But Best Buy has seen comparable sales growth in nine of the past 12 quarters. That represents a real turnaround for a company that only five years ago many people thought was destined for that sad retail graveyard where Circuit City and Linens N Things rest.
And it has accomplished this with the same tactics used by many of its legacy retail counterparts: It got serious about building an online business, sharply cut costs and focused on customer service.
I'm not saying Best Buy is a sure thing to ride out the e-commerce wave over the long haul. But its improvement should send a message to other retailers, that though this retailing environment is certainly tough, it's not so punishing as to choke off any possibility for progress.
Consumers are ready to spend. Many of them still like brick-and-mortar stores. And if you can build a digital experience that pulls them to those stores or makes it easy for them to buy something from their phone they've seen in those stores, even better.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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