Chief Executive Officer at Best Buy
Good morning, everyone, and thank you for joining us. Today we are reporting record Q3 financial results, up $11.9 billion in sales and non-GAAP diluted earnings per share of $2.08, which is up 1% over last year and up 84% compared to two years ago. Against a still-evolving backdrop, our leaders continue to drive new ways of operating and our employees continue to do amazing things to support our customers' technology needs in knowledgeable, fast, and convenient ways. Our omni-channel capabilities and our ability to inspire and support across all of technology in a way no one else can means we are uniquely positioned to seize the opportunity in this environment and in the future.
We continue to capitalize on strong customer demand as more people sustainably work, entertain, cook, and connect at home, and domestic comparable sales growth was up 2% on top of 23% last year. From a merchandising perspective, the biggest contributors to our comparable sales growth in the quarter were appliances, home theater, and mobile phones. Product availability continued to improve throughout the quarter. We had pockets of constraints in areas like appliances, gaming, and mobile phones. Similar to last quarter, however, we do not believe this materially limited our overall sales growth.
While we have faced and continue to face supply chain challenges including delays and higher costs, we are proactively navigating a situation that we have been dealing with for several quarters as our industry has been facing disruptions and supply constraints since early in the pandemic. Our merchant demand planning and supply chain teams made strategic sourcing and inventory decisions early in the year to set us up well heading into holiday, and we are resourcefully adapting to the constantly evolving environment with actions like pulling up product flow, adjusting store assortment based on availability, and acquiring additional alternative transportation. We have deep long-standing relationships with our transportation and logistics vendors, and they have been incredibly supportive as we navigate.
In addition, through our close partnerships with our product vendors, we have a great deal of visibility into and can influence the status of product in the supply chain process. We have varying degrees of inventory and supply chain challenges every holiday season, and this year will be no different. But we enter Q4 with 15% more inventory year-over-year and feel confident in our ability to serve our customers throughout the holiday. As expected, we did experience a more promotional environment for many of our products when compared to last year. When compared to two years ago, we still saw a less promotional environment during Q3.
From a sales channel, results are similar to last quarter. Customers are returning to stores, and they are also choosing to interact with us digitally and via phone and chat at much higher rates than pre-pandemic. Online sales were 31% of domestic revenue compared to 16% in Q3 of fiscal '20, growing by more than $2 billion during that time. Our app saw 19% increase in unique visitors versus last year, and phone and chat sales continued to climb versus last year and two years ago. We continue to be an industry leader in fast and convenient product fulfillment for our customers. During the third quarter, we reached our fastest small product delivery times ever.
Compared to last year, same-day delivery was up 400%, and we nearly doubled the percent of products delivered within one day. Based on a third-party analysis of competitor websites, we are the leader in one day or less published shipping time across a sample of higher volume ZIP codes and higher demand items. In addition to partnering with a diversified set of delivery partners, we also thoughtfully used our employee delivery capability, as we now have more than 400 stores doing employee deliveries with almost 60% of our customers living within 10 miles of an employee delivery location. We also have an industry-leading in-store pickup experience.
We have by far the broadest assortment of CE products available for pickup, and the process is incredibly fast. In Q3, more than 90% of online orders that were available for product pickup were ready in less than 30 minutes of the order being placed. Customers clearly find value in coming to our stores to pick up their products as the percent of online sales picked up at our stores remained high at 42% even with our fast home delivery options with one-third of our store pickup customers choosing our convenient curbside option. And our customer NPS for order pickup in Q3 was up versus last year and two years ago.
In fact, in the last year, 31% of all our purchasing customers bought online and picked up in-store at least once. These strong Q3 results and our market-leading omni-channel capabilities are due to our amazing associates across the company and the investment decisions we have made in the last several years in supply chain, store operations, our people, and technology. Clearly, our business has changed dramatically in the last two years, with digital sales more than double pre-pandemic levels and phone, chat, and in-home sales growing. Customers are starting their research and shopping online and then branching out from there to all forms of digital and physical shopping depending on their specific needs.
Doors are crucial to our customer experience, and they need to be even more efficient and must keep pace with greater customer expectations. For example, we know customers sometimes seek out in-person help to answer questions, and other times they would rather use digital tools to learn about products or pickup their orders in our stores. We have made the right investment decisions to position us as a leader in omni-channel retailing. While we are proud of our progress, there are even more opportunities ahead of us and it is more important than ever to build on our position of strength and truly become a customer-obsessed company. This means we put the customer at the heart of all we do by anticipating their needs, listening, learning, and applying those insights to create long-term relationships and seamless experiences.
That led us to launch Best Buy Totaltech last month. Totaltech is a bold new membership program leveraging our strengths across merchandising, fulfillment, installation, tech support, and product repair, unique capabilities that customers value and no one else can match. Our membership program offers product discounts and periodic access to hard-to-get inventory, free delivery and installation, free technical support, free product protection, and many other benefits. Let me provide a tangible example of how the offer can come to life. A Totaltech member purchases a 65-inch TV and gets a $150 member discount. She gets the TV delivered and mounted on the wall in her living room.
The next month, she buys a new iPhone for her daughter. As long as she keeps up her membership, she gets two years of product protection on the TV she bought and two years of Apple Care Plus protection for the phone. A few weeks later, she can't get her laptop to connect to her printer so she hops on the dedicated chat line with Geek Squad who fixes the problem by remoting into her computer so she can get on with a productive day of working from home. As a member, she received all those benefits for $199 per year. As you can see, not only do members receive significant savings, they can also be confident that whatever their technology needs are we will be there to help.
The goal is to create an experience that makes it inconceivable for members to purchase their tech from anyone else, driving a larger share of consumer electronic spend to Best Buy. We successfully rolled out the program nationally and online and converted more than 3 million former tech support members. It is very early as we just launched last month, but so far we continue to see behaviors that we intend to drive and that we saw in the pilot, including more frequent interaction and higher incremental spend than non-members. Given the breadth of the offer, it is resonating well across all customer demographics, and our new members are scheming [Phonetic] younger than our former Total Tech Support membership program.
NPS members across all channels are higher than for non-members as well, and importantly, our employees believe in and love articulating the value of membership to our customers. As we've discussed in previous calls, we're in the midst of multiple store pilots and tests. Of course, we're always piloting concepts, but right now we are very focused on piloting and testing to build a framework that will move us from a retailer that focused foremost on its stores to a true omni-channel one that provides equal focus on all the ways customers shop with us. I'll provide a few updates on our progress. We launched Phase 1 of our virtual store pilot last month.
For this, we built out a physical store in one of our distribution centers with merchandising and products that is staffed with dedicated associates including vendor-provided expert labor. It has no physical customers. Instead, customers interact with our experts via chat, audio, video, and screen sharing depending on their preference and are able to see live demos, displays, and physical products. It is early, and we have not rolled out all the product categories yet. But initial results are showing much higher conversion rates as well as higher average order value than we with historical chat interactions.
In Charlotte, we have made significant progress rolling out the market pilot designed to leverage all our assets in a portfolio strategy across stores, fulfillment, services, in outlet lockers, our digital app, and both in-store and in-home consultation labor. We launched our new outlet featuring all product categories in addition to a new services hub model and remodeled eight stores. And in Houston, we are continuing to see strong results from our experiential store pilot and plan to roll out aspects of this more broadly in stores across the country as we enter next year. These are not the only pilots happening, and thus, they aren't the only pilots that will influence where we go as a company.
From Northern California to Houston to the Bronx, we are assessing new formats and learning our way to the right physical model. At the same time, we are piloting and evolving our labor models in other markets to meet our customers' changing shopping behaviors. That means leveraging technology in stores that don't have as much labor and developing a much more flexible workforce. This is a workforce that can not only provide expert help across product categories both in store and virtually but also flex into other activities like curbside fulfillment, and it empowers employees to flexibly pickup shifts at other stores or at our distribution centers.
I also want to highlight our unique ability to both inspire and support our customers through our consultation and our Geek Squad services. We have almost 3,000 consultants and designers to provide free consultations across customers' homes, in stores, and virtually. These consultations represent one of our highest NPS experiences, consistently over 80. Importantly, they also lead to longer term and stickier customer relationships as more than 85% of customers who use the program stated they intend to continue shopping with their consultant. Turning to the product support we provide, as many of you likely know, when something goes wrong with your products or a delivery or installation, it is a highly unplanned and often emotional event.
Not surprisingly, our customer research tells us that customers value quick response times and demand transparency, faster repair times, and quality repairs from a trusted provider. Our Geek Squad has an industry-leading set of capabilities that garner market-leading NPS and also drive additional revenue for Best Buy in the moment and over time. Around 20% of our phone and computer repair customers purchase additional products the day they receive the repair. Additionally, our data shows that customers who have phone or computer repairs are far more likely to make a purchase in the following 12 months. Over time, we have also been evolving our partnerships with our vendors in response to changing customers shopping behavior.
Our in-store vendor experiences are crucial to our customer experience and remain a significant source of competitive advantage. We have extended many of these in-store experiences to digital experiences. Our vendors partner with us to provide expert training and tools for our consultants and designers, and importantly, our vendors are increasingly sending sales leads from their own websites to our consultants and designers. We're also leveraging our unique Geek Squad capabilities to strengthen and expand our partnerships with our vendors. We're already the nation's largest physical destination for Apple-authorized repair services including same-day iPhone repairs, attracting new customers as one-third of these Apple repair customers are new or reengaged customers for Best Buy.
In October, we launched Samsung-authorized phone repair service nationally. Roughly 30% of our stores will offer same-day in-store repairs completed by Samsung-certified Geek Squad agents, using Samsung parts, diagnostics, and tools. Phone repair is a universal need for customers, and this expansion gives Best Buy the capability to repair the overwhelming majority of phones in the marketplace. In addition, we're also starting to leverage our industry-leading and convenient buy online, pickup in-store experience in partnerships with our vendors. Customers purchasing select items on Samsung.com now have the option to pick up their products at their local Best Buy stores, and shoppers purchasing Insignia, Toshiba and Pioneer Fire TVs on Amazon.com can pick up their TVs at their local Best Buy stores.
For many of our vendors, we use our considerable supply chain expertise to transport their product, often from the country of origin to our distribution centers. In addition to helping our vendors, it allows us to increase our level of visibility into incoming inventory and to garner greater scale. And finally, we have been investing in our long-standing advertising business, building new capabilities to help vendors effectively reach our customers. Best Buy's relevance, customer relationships, and first-party data have grown along with customers' technology needs and our ability to meet those needs. These are all great examples of value we can provide to our vendor partners that many other retailers cannot.
In addition to focusing our performance on our core CE and Appliance categories, we are continuing to expand our assortment in newer categories where we can leverage our ability to commercialize new technology. For example, we created a robust online experience and assortment for electric transportation, and during Q3 our sales in the category more than doubled. As a result, we are expanding our online assortment of electric bikes by four times and also plan to assort them in physical stores early next year. And because customers are looking to us to complete their solutions, we have been expanding our assortment in categories like outdoor living as more and more consumers look to makeover or upgrade their outdoor living spaces.
This includes products like patio furniture, grills, fire pits, and electric mowers, just to name a few. In fact, earlier this month we acquired Yardbird, a leading direct-to-consumer company that specializes in premium, sustainable outdoor furniture including dining sets, lounge seating, fire tables, and accessories. We are excited about the opportunity to use our expertise in merchandising and supply chain to scale this business both online and in physical locations across the nation. We also made an exciting acquisition recently in the health space. Let me take a second to reiterate our overall health strategy and how the acquisition fits.
Our Best Buy health strategy focuses on three areas that start with our strength in retail and build to connecting patients to physicians. The first focus area is the consumer health category for customers who want to be healthier, sleep better, or need to monitor a chronic condition like diabetes or heart disease, for example. You can see this built out in a robust way on our website. The second area is active aging, which includes device-based emergency response and other services for Generation A, who wish to live independently in their homes. This opportunity shows up prominently in our physical stores. The third focus area is virtual care.
Best Buy's role in virtual care is to enable people in their homes to connect seamlessly with their healthcare providers. The trend to this type of care is increasing, accelerated in large measure by the pandemic. To more fully meet that growing customer demand and accelerate our work with new and innovative services, we acquired a company called Current Health. Current Health developed a market-leading remote patient monitoring platform that allows physicians to monitor and connect with patients in their home. Their platform includes an FDA-cleared wearable medical device that monitors vital signs, a home hub which integrates to hundreds of other monitoring devices, and integration to the patient's electronic health record.
With their remote monitoring platform combined with the scale, expertise, and connection to the home that Best Buy has, we will be able to create a holistic care ecosystem that shows up for customers across all their healthcare needs. To be clear, even though the healthcare industry is evolving quickly, in many ways as a result of the pandemic impacts, it adopts new ways of doing things at a much slower pace than other industries like retail. Virtual care is a truly nascent space with significant opportunity, but it will take time and investment to develop our offerings and scale. As you can see, technology developments are driving our initiatives across the company. We need technology tools and capabilities to help us as we transform and evolve the way we operate and serve our customers. That is why we continue to devote significant resources to technology investments.
For example, we are leveraging our investments in electronic sign labels to very nimbly highlight Best Buy Totaltech member pricing for customers shopping in our stores. We also just launched the ability for our electronic sign labels to provide important messaging regarding product availability so that customers will easily be able to see if the product is in-stock in that store or another store nearby or when it could be delivered and installed. Technology was instrumental in recently launching the first of many new communication enhancements to improve our award-winning appliance customer experience.
Metro delivery customers that utilize the appointment tracker page on the day of their delivery can now see how many stops away their driver is at any given time. It may seem like a small enhancement, but already we can see significant customer engagement with the page, another step toward our goal to make customers feel confident and in control throughout the research, purchase, fulfillment, and use of their large product. Technology was also crucial in our recent launching of next-day delivery of appliances and large TVs, which we are piloting first for in-store and online customers in our Minneapolis and Baltimore markets.
Next month, we are launching a new capability leveraging QR codes for high velocity products that are locked up, particularly in areas of high shrink. Instead of waiting for an associate to unlock the product, the customer can scan the QR code and then proceed to checkout to pay and pickup the product. And we recently implemented enhancements to our digital platform, improving flexibility across our workforce by seamlessly giving employees the ability to pickup open shifts at nearby locations in addition to their home location. These examples are a small token of the work our digital and technology teams are doing to improve the customer and employee experience.
And of course we are also continuing to make significant investments in fundamental technology capabilities like data and analytics and broader cloud migration in order to drive scale, efficiency, and effectiveness. I would like to take a moment to extend my gratitude to our people. Over the past 21 months, they have flexibly dealt with rapidly changing store operations as we responded to impacts of the pandemic. They created safe environments for customers and worked tirelessly to provide excellent service even in situations where customers resisted following safety guidelines and in some cases were disrespectful. In addition, we have increased the level of pilots and tests in the field as we evolve our operating model.
This has introduced a great deal of change. We know that change is exciting, but we acknowledge it can also be challenging. I am truly grateful for and impressed by our associates' dedication, resourcefulness, and flat out determination and I'm thrilled to say that our in-store NPS in Q3 increased versus last year and versus two years ago before the pandemic despite all of these disruptions. Now I would like to briefly touch on our ESG efforts and how we are working across the company to have a positive impact on our planet. Earlier this month, we announced that we are a founding member of the Race to Zero initiative that aims to accelerate climate action within the retail industry.
Best Buy's participation builds on our existing efforts to reduce our carbon footprint. We are proud of our progress in reducing emissions 61% since 2009, and we have pledged to be carbon-neutral by 2040. We have also taken on a more specific focus on the circular economy within our operations and with our customers. In Q3, we collected and responsibly recycled more than 48 million pounds of consumer electronics, keeping products and commodities out of landfills. To help our customers live more sustainably, last quarter we sold more than 5 million Energy Star certified products, helping our customers reduce their carbon footprint and save on utility bills.
We also kept more than 600,000 devices in use longer and out of landfills by leveraging our customer trade-in program, Geek Squad repair services, and Best Buy outlets. These are initiatives our customers and vendors value and capabilities no one else has at our scale and breadth. In summary, we have delivered remarkable year-to-date results, and I am so proud of the execution of all our teams. We are looking forward to a strong holiday season and believe we are extremely well-positioned with both the tech customers want and fast and convenient ways to get it. We launched some of our Black Friday deals in mid-October that included a price guarantee for all customers, and this past Friday started Black Friday early by making almost all of our Black Friday deals available.
Throughout the holiday season, we are promising free, next-day delivery on thousands of items, and of course store pickup whether in-store or curbside will be a great and convenient option for our customers to get their products. Building on that, as we think about next year and beyond, we are mindful of just how much the consumer has changed and how enduring that change will be. Terms like home nesting and virtual care have been invented to describe what all of us know so well, that where we work, entertain, receive health care, and connect has changed, and our homes are now central to our lives more than ever before.
The penetration of technology associated with this way of living has been and continues to be sizable, and we are already seeing shorter upgrade cycles as technology evolves and we constantly optimize our homes. The demand for convenience and experience on the customer's terms has exponentially driven change. Our hypothesis has consistently been that true, omni-channel retailing would create differentiated experiences that allow us to seamlessly and conveniently engage and retain customers. As such, we have continuously invested in these experiences. And notably, we never defined omni-channel as being stores and online.
Instead, we include our unique and powerful service, virtual, and in-home capabilities. We are certain that technology will continue to play a more dominant role in consumers' lives given our omni-channel capabilities, the ones we have today and the ones we are building for the future. We are fully confident that we will capitalize on a much larger, more broadly defined consumer electronics category and be able to better serve a customer who will be using and upgrading much of that fee more frequently. We plan to hold an investor event next March to share more detail on our initiatives, provide our thoughts on our financial model going forward, and introduce longer term financial targets.
I will now turn the call over to Matt for more color on our financial results.