Best Buy Turns Profit But Warns Of Sliding Sales
Best Buy announced that it swung to a profit during its first quarter, due largely to a tax restructuring and cost reductions, and its stock price jumped 8 percent immediately following the announcement but was up just 1 percent by Thursday afternoon.
The Richfield-based electronics retailer’s profits were well above analyst expectations but its same-store sales fall 1.9 percent. Same-store sales, an important indicator in retail, represent revenue from stores opens at least 14 months.
Sharon McCollam, Best Buy chief financial officer, said the company expects to see continued declines in its same-store sales numbers for its second and third quarters due to an absence of major product launches.
“As we look forward to the second and third quarters, we are expecting to see ongoing industry-wide sales declines in many of the consumer electronics categories in which we compete,” McCollam said in a statement. “We are also expecting ongoing softness in the mobile phone category as consumers eagerly await highly-anticipated new product launches.”
Best Buy announced that net earnings for the first quarter, which ended May 3, totaled $481 million, or $1.31 per share, up drastically from a loss of $81 million, or $0.24 per share, during the same period last year. A large portion of those gains came as Best Buy reorganized its overall tax structure, which resulted in a tax benefit of about $1.01 per share.
However, the company’s adjusted profits, which excludes restructuring and other charges, was still $0.33 per share, $0.13 higher than what analysts polled by Thomson Reuters had expected.
Revenue, meanwhile, totaled $9.04 billion, down 3.2 percent from $9.35 billion in the first quarter last year. First-quarter revenue fell short of analysts’ projections of $9.21 billion.
Shares of Best Buy’s stock were trading up about 3.2 percent at $26.15 per share during late Thursday morning.