Best Buy's sales dropped, but profits rose during holidays

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Net earnings rose 26.7% to $607 million, beating expectations of $524 million. "At the same time, our revenue was hindered by unprecedented product availability constraints across multiple vendors and categories, only some of which were anticipated". Best Buy's shares dipped more than 10 percent in pre-market trading Wednesday before mostly recovering.

Yet, revenue fell 1% to $13.48 billion, which was below the $13.62 billion that analysts expected.

Best Buy, the No. 1 USA electronics retailer, reported an unexpected decline in holiday-quarter same-store sales on Wednesday, hurt by weak demand for tablets, gaming consoles, wearable devices and mobile phones.

The chain expects to report earnings per share of 35 cents to 40 cents in the fiscal first quarter, compared with 49 cents expected by Wall Street.

Best Buy's same-store sales declined 0.7% for the period ended January 28, which included the critical holiday shopping season. Further, same-store sales in North America dropped 0.9%, with CEO Hubert Joly calling out "considerably weaker-than-expected demand" in the gaming category.

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Total sales at USA electronics and appliance stores were down about 4 percent in December, according to data from the U.S. Department of Commerce.

It will now purchase $3 billion in shares over the next two years, up from $1 billion in the same period. The company guided for per-share earnings of $1.62 to $1.67.

In Best Buy's much smaller worldwide segment, revenue increased 2.5%, driven by growth in Mexico. Excluding items, earnings came in at $1.95 per share, which beat analyst estimates of $1.67 per share.

Domestic online revenue, however, climbed 17.5 percent on a comparable basis to $2.3 billion, primarily due to increased traffic and higher conversion rates.

Best Buy shares have risen slightly more than 3 percent since the beginning of the year, while the Standard & Poor's 500 index has increased nearly 6 percent. The retailer reported a 0.9 percent decline in USA same-store sales versus an expected increase 0.4 percent. Revenue was reported as $39.4 billion.