Best Buy earnings slump on turnaround costs, Super Bowl shift
Best Buy Co. reported a net loss and sliding sales for its first quarter, weakness that the electronics retailer blamed on the costs of its ongoing turnaround and calendar shifts that affected the key Super Bowl selling day.
Investors sent Best Buy stock down as much as 4.8% to $25.51 a share in early trading in New York.
For the quarter ended May 4, the Richfield, Minn. retailer said it suffered a loss of $81 million, or 24 cents a share, down from a profit a year earlier of $158 million, or 46 cents a share.
Stripping out restructuring costs -- including costs linked to the company’s sale last month of a 50% stake in a Best Buy Europe venture -- earnings per share rose to 36 cents. Wall Street had expected profit of 24 cents a share.
Best Buy’s revenue for the quarter slid 9.6% to $9.38 billion, which the retailer attributed to difficult comparisons from an additional week during the same period in 2012. Without the week, the company’s first=quarter revenue would have slid 2.2%, it said.
Same-store sales, which factor in only locations open for more than a year, dipped 1.1% domestically. The company also had an explanation: The Super Bowl, for which Best Buy sells hordes of televisions, was played in the company’s fiscal fourth quarter rather than the first as in past years.
Discounting the calendar shift, as well as Best Buy’s move to reduce sales in some of its non-core businesses, would have left same-store sales flat, the company said.
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Best Buy is in the middle of a revamp as it attempts to keep pace with competitors such as Amazon.com. Since the arrival in August of new Chief Executive Hubert Joly, a turnaround specialist, the company has pushed hard to cut costs and close stores.
Joly said Tuesday that the company negotiated rent reductions for several stores and shut one large-format store in the quarter and struck a deal with Samsung to set up boutiques for the brand within Best Buy stores.
The rollout of the Samsung Experience Shops will probably affect Best Buy’s results during the second quarter, the company said.
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