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Best Buy Posts $1.7B Q4 Loss

Minneapolis – Best Buy reported a $1.7 billion loss in its fiscal
fourth quarter due to $2.6 billion in one-time charges.

The charges were related to last year’s buyout of its mobile
business profit share agreement from European partner Carphone Warehouse and
the closure of its big-box stores in Great Britain.

The company is also taking what CEO Brian Dunn described as


to cut $800 million in costs over the next three years and improve
its operating performance.

Total revenue for the three months, ended March 3, was $16.6
billion, an increase of 3 percent, while comp-store sales declined 2.4 percent.

In the U.S., total revenue rose 4.2 percent year over year to
$12.6 billion, and comp-store sales slipped 2.2 percent.

Online sales increased 21 percent during the quarter, which
included the critical holiday sales month of December.

U.S. comps were fueled by low triple-digit growth in tablets, a 20 percent spike in mobile phone comps, a 13 percent increase in wireless and broadband subscriptions, and a 10 percent hike in major appliances. The latter was due to Best Buy’s store labor model for majaps and “promotional enhancements,” CFO Jim Muehlbauer said on an earnings call, and the company outperformed the overall marketplace with greater share gains in the fourth quarter than in the third, and online holiday sales that outpaced industry growth 2-to-1. Yet the comp gains were more than offset by same-store sales declines in TVs, notebooks, digital imaging and gaming, which reflected general industry trends, Muehlbauer said.

Excluding restructuring charges, adjusted gross profit dollars
increased 3 percent in the U.S. to $3 billion, but represented a rate decline
of 40 basis points due to a larger mix of lower-margin small and midsize promotional

For the full fiscal year, the company lost $1.2 billion, while
total revenue rose 1.9 percent to $50.7 billion and comp store sales slipped
1.7 percent.

In the U.S., online sales rose 18 percent, mobile comps increased
13 percent, and subscriptions were up 11 percent. Best Buy estimated it gained
total market share during the 12-month period.

Best Buy has also changed its fiscal year to end the Saturday
nearest the end of January, effective with the current quarter.

Looking ahead to the current fiscal year, Best Buy expects
total company revenue to remain flat at $50 billion to $51billion, reflecting
comp declines of 2 percent to 4 percent. In the U.S. it is forecasting
e-commerce growth of 15 percent, growth in services of 10 percent, and is
targeting wireless and broadband subscription growth at 15 percent.