Wednesday, October 7th7.3°C

Best Buy return to profit in 4th quarter and tops Wall Street expectations as it cuts costs

MINNEAPOLIS - Best Buy returned to a profit in the fourth quarter and topped Wall Street expectations as it cut costs to offset declining sales.

The specialty electronics retailer says it gained market share during the quarter and shares jumped 7 per cent in morning trading Thursday.

Best Buy has been dealing with increased competition from online stores, notably, and discounters like Wal-Mart. Under CEO Hubert Joly, the company has tried to turn around results, revamping merchandise, training employees and cutting costs.

That hasn't been enough to reverse a sales decline. Revenue in stores open at least 14 months, a key retail metric, fell 1.2 per cent in the U.S. during the quarter, which includes the key holiday season. November and December can account for up to 40 per cent of total sales for retailers.

But it was better than the 3.2 per cent decline in revenue the entire consumer electronics industry faced, according to NPD data Joly cited.

"The fourth quarter was an environment of declining retail traffic, intense promotion, fewer holiday shopping days and severe weather," Joly said in a statement. "In the face of these unusual circumstances, our strategy to be price competitive and provide an improved customer experience resulted in market share gains in a weaker-than-expected consumer electronics market."

Best Buy has also introduced shop-within-shops — dedicated store space and signage for top brands like Apple, Samsung and Microsoft.

"We expect more and better of the same in this category," Joly said.

The company has cut costs aggressively and during the quarter, annualized cost reductions increased by $260 million.

Total annualized savings have now reached $765 million, exceeding the target laid out by Joly in 2012, and on Thursday, Best Buy upped that target to $1 billion.

Net income after paying preferred dividends totalled $293 million, or 83 cents per share. That compares with a loss of $409 million, or $1.21 per share last year.

Excluding one-time items such as restructuring costs, asset impairments and other costs, net income was $1.24 cents per share, easily beating the $1.01 that analysts had projected, according to a poll by FactSet.

Revenue fell 3 per cent to $14.47 billion from $14.92 billion. Analysts expected revenue of $14.67 billion.

Shares rose $1.82 to $27.64 in morning trading. The stock has fallen fell 35.3 per cent since the beginning of the year.

The Canadian Press

Read more Business News

Recent Trending

Today's Market
S&P TSX13647.26+95.06
S&P CDNX538.69+8.78
S&P 5001979.92-7.13
CDN Dollar0.7680+0.0008
Natural Gas2.463-0.007

Okanagan Companies
Pacific Safety0.21-0.01
QHR Technologies Inc1.25+0.03
Metalex Ventures0.05-0.01
Russel Metals23.31+0.80
Copper Mountain Mining0.56+0.06
Colorado Resources0.07-0.01
ReliaBrand Inc0.0031-0.0009
Sunrise Resources Ltd0.02+0.00
Mission Ready Services0.085-0.010
Decisive Dividend Corp3.06-0.43
Diamcor Mining0.90+0.00


2432768Cozy 2 Bed Home in Westpoint MHP
more details
Click here to feature your property
Please wait... loading

Perfect (reno'd) home

Photo: Thinkstock.comHow many times have you found a home in the perfect location, but it needs too much work as per the home inspection? There is a great program available through most lenders that w...

Living beyond 100

Photo: ContributedThere was a time most careers involved an apprenticeship of one sort another. Some official, others involving years of servitude, and others time simply spent watching and emulating ...

5 Claim misconceptions

Photo: Thinkstock.comIf you have been hurt in an accident or as a result of medical negligence you will likely look to your friends and family for some advice on how to deal with the situation. These ...


Member of BC Press Council