Best Buy Exceeds Expectations Amid Smartphone Sales Slump
Best Buy edged past analyst (and its own) expectations in the first quarter, despite slowing smartphone sales affecting the results.
For the three-month period ending April 30, the Richfield-based electronics retailer saw profits nearly double, from $129 million last year to $229 million this quarter. Its income growth is largely attributable to a number of cost-cutting measures and strong year-over-year sales in appliances, home theater equipment and wearables, such as the fitness tracker Fitbit. Strength in other sales categories helped Best Buy offset the softness in smartphones and tablets, an electronics division that has performed poorly across the industry.
The company’s same-store sales, which fell 0.1 percent, beat out its own forecast of a 1 to 2 percent drop. Best Buy said some of its decrease in sales came from shuttering 13 large-format locations and 24 Mobile stores during the previous fiscal year. However, the retailer had better luck online with digital sales growth of about 24 percent.
All in all, the company posted first quarter earnings per share of 44 cents on $8.44 billion in revenue. Although that’s 1.3 percent from its $8.56 billion in revenue during the same period last year, Best Buy still eked ahead of Wall Street’s $8.29 billion in revenue and 35 cents per share earnings estimates.
Best Buy also announced that its chief administrative and chief financial officer Sharon McCollam would officially step down at the retailer’s annual shareholder meeting on June 14.
“I want to thank Sharon for all that she’s done for Best Buy,” company CEO Hubert Joly said in a statement. “Sharon came out of retirement in 2012 to help revitalize the company when it was facing a multifaceted crisis. Three and a half years later, we are in a completely different place and are into the next phase of our journey as a company.”
Corie Barry, a 16-year Best Buy veteran and currently its chief strategic growth officer, will replace McCollam. Several of the company’s executive team members will also assume some of McCollam’s roles within Best Buy’s information technology, real estate, customer care, and supply chain functions.
Best Buy stock, which had risen 8.4 percent so far this year, leveled out near its start of 2016 price of $30.65 after Tuesday morning trading.