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Best Buy Sales Rise But Q3 Profits Fall 29%

12/19/2011 12:01:00 AM Eastern

MINNEAPOLIS — Best Buy showed
gains in third-quarter revenue and compstore
sales, but they came at a cost.

Net earnings fell 29 percent to $154
million for the three months, ended
Nov. 26, as the company flexed its
promotional muscles during Black November
and took a $150 million pretax
restructuring charge to shut its 11 bigbox
U.K. stores and dispose of certain
“entertainment assets” in the U.S.

“We took actions to provide value
to customers and drive our business
in this competitive consumer environment,”
noted CEO Brian Dunn. The
result, he said, was “positive traffic,
comparable store sales growth and
continued progress on our key strategic
focus areas, highlighted by strong
performance online.”

Total revenue rose 1.7 percent to
$12.1 billion during the quarter on essentially
flat comp-sales growth of 0.3
percent.

Within the U.S., net sales edged up
2 percent to $8.9 billion and comps
increased 0.9 percent, up from last
year’s 5-percent fall and reversing five
consecutive quarters of same-store
sales declines.

In addition, an expanded online assortment
and more competitive pricing
helped fuel a 20 percent increase in ecommerce
sales.

Dunn told analysts during an earnings call that Best Buy will continue
to use price to drive traffic and
sales, and will boost operating income
by being “relentless focused”
on attaching subscriptions and service
plans while cutting costs and
driving efficiencies throughout the
system.

On the product front, mobile computing
(including tablets, e-readers and
notebooks), appliances, mobile phones
and movies all posted the strongest
comp store gains, with majaps rising 13.7
percent, mobile phone comps climbing 9
percent, and comp sales of carrier contracts,
mobile broadband and other subscriptions
increasing 8 percent.

The gains were partially offset by
comp declines in digital imaging, gaming
and TV. The latter showed sequential
improvement from prior quarters,
the company said, resulting in a low
single-digit comp decline during the
quarter.

Broken out by category, CE, which
represented 35 percent of the sales
mix, fell 4.8 percent; computing and
mobile phones, which were 40 percent
of the mix, rose 8.8 percent; entertainment,
which was 13 percent of the
mix, fell 9 percent; appliances, which
comprised 5 percent of the sales mix,
rose 13.7 percent; and sales of extended
warranties and service contracts,
which were 6 percent of the mix,
slipped 0.7 percent.

Looking ahead, Best Buy’s full-year
revenue projections remain unchanged
at about $51.8 billion, with comp sales
coming in at flat to a 3-percent decline.

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