Best Buy's Profit Falls 16%

By Retail FOXBusiness

Electronics heavyweight Best Buy (BBY) disclosed on Thursday a 16% drop in fiscal fourth-quarter profits, but strong smartphone sales kept the company’s bottom line above the Street’s view.

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Richfield, Minn.-based Best Buy also issued a somewhat cautious view that didn’t seem to faze shareholders, who bid the stock 2.8% higher ahead of the opening bell.

The company said it earned $651 million, or $1.62 a share, in the quarter ended February 26, compared with a profit of $779 million, or $1.82 a share, a year earlier. Excluding one-time items, it earned $1.98 a share, topping forecasts for $1.84.

Sales slipped 1.8% to $16.26 billion, trailing consensus calls for $16.3 billion. Domestic revenue slumped 4% to $12.1 billion, compared with a 4% rise to $4.1 billion overseas.

Same-store sales declined 4.6%, while online sales jumped 11%. Gross margins grew to 24.3% from 24%.

“Overall demand for key consumer electronics products was a challenge for the industry last year,” CEO Brian Dunn said in a statement. “Thanks to the hard work and dedication of our employees, we accomplished several key initiatives during the year that helped to both partially mitigate these challenges.”

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Best Buy countered slipping notebook sales with growth in new tablet computers and a low double-digit increase in mobile phone sales.

For the new fiscal year, Best Buy said it expects non-GAAP EPS of $3.30 to $3.55 on sales of $51 billion to $52.5 billion. Analysts had been looking for EPS of $3.56 on stronger sales of $52.13 billion. Same-store sales are seen flat to down 3%.

The modest rise in Best Buy’s shares despite the mixed results and outlook helped erase some of the 7% decline in the company’s stock so far this year. Best Buy has tumbled more than 22% from a year ago.

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