Best Buy’s Soft Q3 Sends Stock Down
Richfield-based Best Buy Company, Inc., on Tuesday reported third-quarter earnings of $217 million, or 54 cents per share-down from $227 million, or 53 cents per share, during the same period in 2009.
Revenue for quarter that ended on November 27 also declined from the previous year, totaling $11.89 billion versus $12.02 billion from last year's third quarter.
The company's domestic same-store sales-which comprise revenue from stores, call centers, and Web sites operating for at least 14 full months-declined 5 percent, a drop that the company attributes to “lower industry demand in key categories and changes in market share.”
Jim Muehlbauer, chief financial officer and executive vice president of finance, said in a statement that domestic sales were “softer than we expected, but we were very pleased with the continued strong gross margin performance and actions to lower variable expenses.”
The electronics retailer slashed its earnings guidance for fiscal 2011-it now expects earnings per share in the range of $3.20 to $3.40, down from the previously announced $3.55 to $3.70.
“I am grateful for the hard work and dedication of our employees in the start of the holiday shopping season,” CEO Brian Dunn said in a statement. “While sales were lower than we expected during the quarter, I'm pleased with our strong store execution, solid gross margin expansion, and efforts to control costs. I'm confident that our employees will continue to deliver great experiences that help our customers select the best gifts for their friends and family this holiday season.”
Best Buy said that its domestic market share declined during the quarter, primarily as a result of lower sales of TVs, mobile computing, and gaming software. The company said that it will continue to focus efforts on selling mobile phone, broadband, and TV connections to consumers.
Following the company's announcement of its third-quarter results, its stock price dropped nearly 15 percent to close at $35.52 per share on Tuesday. It was trading down about 2 percent to $34.57 during Wednesday afternoon trading.
Best Buy is Minnesota's third-largest public company based on revenue from its most recently completed fiscal year, which totaled $49.7 billion.