Best Buy Sidesteps U.K. Rumors
During a Tuesday conference call with investors, Best Buy Company, Inc.'s CEO said that there will be no “imminent announcement” regarding the company's expansion plans in Europe, and the company doesn't comment on rumors like the one circulated this weekend by the press in the United Kingdom.
The rumors suggested that Best Buy is reconsidering its expansion plans in Europe. The company reportedly had a goal of opening 80 big-box stores in Europe by 2013 but may postpone its plans.
When contacted by Twin Cities Business on Monday, a Best Buy spokeswoman said, “As a matter of practice, we don't comment on rumors or speculation.”
When an investor brought up the rumors during Tuesday's earnings conference call, CEO Brian Dunn replied, “Our strategy in Europe is multi-format, multi-brand, multi-channel. . . . Last year, we opened six big-box stores in the U.K. We're really pleased with what we've seen in terms of consumers. . . . That being said, we manage our business as a portfolio of brands and businesses, and all of them over time have to earn their right to capital.”
“We don't have any imminent announcement about our business in the U.K., and you know that I don't comment on rumors,” he added.
The company reported a decline in earnings but still outperformed analysts' expectations-due largely to strong demand for mobile phones and tablets, as well as a growing business in China.
The Richfield-based electronics retailer reported net earnings of $136 million, or 35 cents per share, down from $155 million, or 36 cents per share, during the same period a year ago.
Total revenue climbed 1 percent to $10.9 billion-despite the fact that total domestic sales fell 0.8 percent, and domestic same-store sales dropped 2.4 percent.
Those declines were largely offset by gains in the company's international business, particularly in China. Total international revenue increased 7.6 percent during the quarter while international same-store sales grew 0.4 percent.
Analysts polled by Thomson Reuters were expecting a profit of 33 cents per share on sales of $10.7 billion.
In the United States, the company saw sales growth in mobile phones and mobile computing, driven primarily by demand for tablets, like the iPad 2. Dunn told investors that the company is rolling out “tablet central” in its stores nationwide in July, a zone in each store that showcases all available tablets and related accessories. In other positive news, online revenue jumped 12 percent during the quarter.
But the company experienced declining sales in televisions and digital imaging. Dunn told investors that digital camera sales were adversely affected by the recent events in Japan, which disrupted supply.
Although Best Buy continues to report growth in its international operations, that growth appears driven primarily by the Five Star business in China. In fact, Europe and Canada both experienced a drop in same-store sales during the first quarter.
Best Buy in April revealed plans to cut costs by reducing the footprint of its “big-box” stores by 10 percent and focusing its efforts on expanding standalone mobile stores. Chief Financial Officer Jim Muehlbauer told investors on Tuesday that the company is in discussions with landlords who are receptive to the idea of reducing the footprint of existing stores, as well as subtenants interested in leasing the space and benefiting from the visitor traffic to Best Buy stores.
Best Buy reaffirmed its fiscal 2012 earnings outlook of $3.30 to $3.55 per share. And company executives told investors that they anticipate revenue on the higher end of their previously released outlook of $51 billion to $52.5 billion.
Shares of Best Buy's stock shot up about 5 percent to $30.27 during Tuesday morning trading following the company's earnings announcement.