We expect this will be offset by higher advertising expense as we prepare for our earlier start to the holiday season, as well as increased variable costs from the anticipated revenue growth. So far, positive trends have continued.Â Sales of large appliances and home theater have picked up as stores reopened. We were a pioneer in this whole idea of buy online and pick up in store, which allowed us to be the first major retailer to figure out how do we ship from store. Going forward, we are on a path to develop a flexible workforce model that leverages technology and provides associates the ability to work whenever and wherever they want. We will provide more examples as our plans evolve, but here are some initial thoughts on strategic implications over the next several quarters. Mike Mohan -- President and Chief Operating Officer. And next we'll hear from Brian Nagel with Oppenheimer. Best Buy's (BBY) Q2 results gain from growth across most categories. Have a great day. Online sales shot up 242% in the U.S. compared with the prior year, as the website drew higher traffic and more people converted from browsing to buying. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. Holidays likely will be different. Moving to SG&A. Since the beginning of the pandemic, we've worked in partnership with our company founder, Dick Schulze, to provide our employees with emergency financial assistance. So, we will continue to improve the customer experience to kind of improve the gross margin rates online and continue to look at our cost structure overall for both channels. I'll start with the question. The health of our inventory remains strong and the lower inventory position reflects the inventory challenges Corie referenced earlier. So, customers can more easily select the right products based on the space in their homes by using the camera on their own phone. And maybe on a more near-term question. For example, next month, we will be piloting a ship-from-store hub model to help handle significant volume pre-holiday and year-round. "This is an acceleration of business at phenomenal proportions, and we are working closely with our vendor-partners to catch this trend as fast as we can and get ourselves back into a healthier inventory position," she said. And then, finally, the actual duration and depth of the virus and how that proceeds through the fall. And we also said we view that as very temporal in nature. The company declined to provide a financial outlook for the rest of the year. I'd like to provide some insight into our approach, starting with three concepts we believe to be permanent and structural implications of the pandemic. However, the company is cautious and expects slowed rate of growth for the third quarter. It's not about less stores, but it might be about more points of presence and a different ability to meet the customer. I will now turn the call over to the operators for questions. This is especially critical during the current environment and increase the need for remote consultation and assistance capabilities. Why wouldn't you be gaining share, especially as your stores are now open and you're growing sales 20% quarter to date? I'd say over the years in online, we've actually been improving our gross margin rates. So, my question there is, is that -- do you think the weakness in mobile carry is more of a function of maybe a lack of product cycle or just the disruptions to the stores through most of the second quarter? And I wouldn't see the strategic point of view change very much, I just think that we have an ability to continue to accelerate our strategy. And even over this period of time, we've seen better attach rates during the times our store were closed in Q1 and Q2. Can you update us on where you guys are today? Please refer to the company's current earnings release and our most recent 10-K for more information on these risks and uncertainties. We are always striving to attract and invest in talent that reflects the diversity of all communities and fosters an inclusive culture across the organization. The increase was driven by a comparable sales growth of 5%, which was partially offset by the loss of revenue from 25 stores that are permanently closed in the past year as part of our normal course of business. He also cautioned that the retailer will have higher expenses as its stores are fully reopened. And now, we'll move to our next caller. August 25, 2020 07:00 AM CDT. And our second quarter also includes lapping last year's prime day business, where we do a lot of revenue with our own exclusive models with our Amazon Fire TV. As it relates to our people, we are investing in compensation and beginning to incorporate elements of the flexible workforce we first introduced at our investor day a year ago. But now just considering the stronger digital sales going forward, are there efforts to maybe close the gap between those two margins and perhaps bring them in line in future quarters? The Best Buy earnings report pushed BBY stock lower. During the quarter, nearly 1,000 stores reopened to customers after operating with a curbside-pickup-only model and later allowing customers to visit stores by appointment. This will allow a checkout process that is fast, convenient and involves minimal contact for customers. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. You just operated with a new model that showed you can perform pretty well without having to incur as much of an operating expense burden as you had in the past. But even with those, we believe that the demand for the products and services we sell and just also the inventory availability will continue to lend itself to the less promotional environment. Does Oracle Deserve More Credit for Q2 Results? I'll start, Kate, and maybe Matt can follow some of that promotional commentary. Though Best Buy posted better than expected earnings, the reaction in the shares was swift and negative. Online has typically had a little less -- a little more -- a little lower gross profit rate but a little bit more SG&A leverage. As we think about entering the holiday selling season here, what is sort of the promotional calendar looking like from your perspective today? In the wake of George Floyd's death and the subsequent protest, Best Buy is committed to doing better when it comes to taking action to address racial inequities and injustices. From a capital expenditure standpoint, we still expect to spend in the range of $650 million to $750 million during fiscal '21. And when we look at what we did for automation over the last three and the things that we had to do, it's very easy for us to receive products in our seven RDCs and then put them on the normal truck runs out to the stores that we already do and if we need to run extra trucks out to these 250 locations, so we can actually have rapid replenishment. You're sitting on over $5 billion worth of cash. Looking back, it was only five months ago that we closed our stores to customer traffic, drew down the full amount of our revolver, made the difficult decision to furlough associates and saw total sales declines reach 30% at one point. On August 2, the beginning of our third quarter, we implemented a new pay structure that reflects an ongoing evolution and is the result of clear and consistent feedback from field employees across the country. To provide more predictability and pay, a 4% increase in hourly rate replaced short-term incentive compensation for hourly store employees below the leadership level. We are also evolving the way we work to position employees to serve customers based on need, irrespective of channel. I wanted to look at the margin differential between the retail stores and e-comm. But largely, the product mix that we experienced in Q2 was fundamentally offset by the promotional -- favorable promotional environment that we saw in Q2. Best Buy reported second-quarter net income of $432 million, or $1.65 per share, a significant increase from $238 million, or 89 cents per share, a year earlier. Matt will provide more detail later, but we expect Q3 SG&A expense to be more in line with last year's third quarter. I think, ultimately, you nailed it. Our Geek Squad agents are not only providing technical support to customers in stores, many of them have also been cross-trained to work in our call centers, providing crucial phone and chat support to solve a variety of customer needs. Best Buy (BBY) came out with quarterly earnings of $1.71 per share, beating the Zacks Consensus Estimate of $1.09 per share. So, I think we found someone who has life experience that very closely aligns with where we think the strategy needs to go. Best Buy posted adjusted earnings of 62 cents per share on $8.95 billion in revenue, compared to the consensus estimates of 47 cents per share and $8.85 billion. We also have plans in place that will allow us to adapt quickly if we needed through the remainder of the year. Does it have to do with still trying to control traffic into the store or the tighter inventory levels? It's also a place that we're launching our own same delivery with our Best Buy team members, which is a lower cost than using a third-party service. For example, she said,Â digital health, home fitness, sustainable living and outdoor and camping equipment have been popular online. approximately 51,000 hourly workers that it furloughed. I think about it in two different ways. Best Buy (BBY) delivered earnings and revenue surprises of 56.88% and 0.70%, respectively, for the quarter ended July 2020. To be clear, in Q2, the primary gross profit rate pressure we saw was coming from supply chain in the form of higher parcel expense. We ended the quarter with $5.3 billion in cash. Comparable sales in the services category declined approximately 9%. And then how do you think about the reduction in freight cost and the benefit that you'll get as you make this transition? She's also the former CEO of Philips Healthcare, where she helped bring consumer-grade automatic defibrillators to the market. Gross profit as a percentage of sales declined 100 basis points compared to last year, which partially offset the SG&A favorability. Best Buy's Sharp Share Drop Isn't Over. And we're seeing it across basically every aspect of what we're selling in our stores. So, I wanted to dig in on some of the category trends that you're seeing in August -- or July and August, whatever you think is a better lens to look at it through. As we opened our stores, we saw significantly improved sales trends that outpaced our staffing levels for a period of time. So, we'll continue to peel apart who those customers are. While still relatively small categories from a revenue standpoint, they are extremely relevant in today's environment and highlight our ability to leverage our digital-first mindset supported by our expertise around curation and supply chain. Welcome to Best Buy's First Quarter Fiscal 2021 Earnings Call. See you at the top! CEO Corie Barry said on a media call that some of Best Buy's sales have been driven by necessity as people work, learn and cook at home during theÂ coronavirus pandemic. Prior to reopening, we were retaining approximately 92% of last year's revenue at the start of Q2. The former CEO of Philips Healthcare and leader of the IBM Watson health team will start in September.Â Its former health-care chief Asheesh Saksena stepped down earlier this month. These locations were chosen for their space, proximity to carrier partners and ability to support same and next-day delivery. As Corie mentioned, we expect our Q3 SG&A dollars to be very similar to last year's Q3. As we reopen our stores, we saw considerable demand from customers who clearly value and want an in-store shopping experience. 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