Best Buy Co Earnings Call Insights: Price-Matching Program and Free Cash Flow

Best Buy Co Inc (NYSE:BBY) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Price-Matching Program

Kate McShane – Citi: My question is surrounding the price-matching program that you’re going to put in place or best be put in place during holiday. I wondered if you could compare and contrast what we have done during holiday versus what we can expect to see this year and if there were any learnings during holiday that you learned?

Sharon McCollam – EVP, CAO and CFO: Hubert, would you like to take that question?

Hubert Joly – President and CEO: Yes. The line was not very good. I think your question pertains to our price-matching activities during the holidays and our strategy going forward. So this is a decision we made in October to make sure that we enhance our price competitiveness and fight the so-called showrooming phenomenon. Our Blue Shirts teams in the field have been very excited about this program. The customers have been very engaged in this program, and we believe that it has helped improve our price perception during the program. So, we’ve been very excited about it. In terms of impact on our margins, there was a big concern, right, there in terms of the impact it would have. The impact has really been minimal, because in general terms, actually our prices are quite competitive. And, as you know, we’ve decided to move from the pilot to a policy. So, the situation now is that we’re matching both online and in the stores. We’ve actually expanded the price-matching policy to cover essentially all product categories, including accessories and hardware and software. There is very few exceptions to the policy. The fact that we’re going to make this is a policy and make it permanent may increase the cost a little bit, so that’s a factor that we have in mind. But we are Best Buy and we are determined to be the Best Buy for our customers. And, of course, our value proposition to the customer is not just the price, it’s all of the price customer promises, and we like the response we’re getting from customers.