DOW JONES NEWSWIRES
Best Buy Inc.'s (BBY) fiscal second-quarter earnings fell a
bigger-than-expected 22% as sales continued to fall and the
company's international business swung to a loss.
But the consumer-electronics retailer raised its fiscal-year
outlook because first-half revenue "modestly exceeded" expectations
and customer traffic showed signs of stability.
Best Buy now expects earnings of $2.70 to $3 a share on revenue
of $48 billion to $49 billion, with same-store sales off as much as
2%. In March - as the stock market was bottoming - the company
predicted earnings of $2.50 to $2.90 a share, revenue of $46.5
million to $48.5 million and a same-store sales decline of up to
5%.
Shares fell 2.5% premarket to $39.41 on the quarterly profit
miss. The stock through Monday's close was up 44% this year.
While consumer-electronics demand continues to slide, a
Bernstein analyst expected back-to-school personal-computer sales
to partly offset the weakness.
Meanwhile, according to Goldman Sachs, the benefits of Circuit
City Stores Inc.'s (CCTYQ) demise have been overshadowed by major
strategic challenges. Best Buy's sales remain under pressure across
many major categories while the company also faces increasing
competition from mass-market and online retailers.
For the quarter ended Aug. 29, Best Buy reported a profit of
$158 million, or 37 cents a share, down from $202 million, or 48
cents a share, a year earlier.
Revenue increased 12% to $11.02 billion, reflecting the addition
of Best Buy Europe's sales and the addition of 170 net new stores
in the past year. Same-store sales, or sales at stores open at
least 14 months and including Internet sales, fell 3.9%.
Analysts polled by Thomson Reuters were looking for earnings of
42 cents a share on revenue of $10.78 billion.
Gross margin edged up to 24.4% from 24.3%.
In the U.S., revenue was up 2% as the company added a net 104
new stores. Same-store sales fell 3.1% as traffic increased
slightly but was more than offset by a reduced average transaction
size. Best Buy estimated it gained about 2.7 percentage points of
market share as of July 31.
International revenue soared 65%, on the addition of Best Buy
Europe and the new stores. However, same-store sales dropped 8.3%
on the currency-exchange impacts. The segment posted an operating
loss on expenses related to Best Buy Europe.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
tess.stynes@dowjones.com
