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Best Buy Q1 Profits Fall 26%

Minneapolis – Restructuring charges for 41
previously announced store closures dragged down Best Buy’s fiscal first-quarter
net earnings 26 percent to $158 million.

Excluding the $127 million in one-time charges,
profits fell 4.7 percent to $246 million for the three months, ended May 5.

Total revenue rose 2 percent to $11.6
billion while comp-store sales fell 5.3 percent for the three-month period.
U.S. revenue increased 5.1 percent to $8.8 billion and domestic comp-store
sales declined 3.7 percent.

“Best Buy is in a turnaround, and the
strategic priorities we laid out at the beginning of the year are just the
first phase of the changes to come,” interim CEO Mike Mikan said in a statement.
“We know we have to better adapt to the new realities of the marketplace, and
we are creating a long-term plan designed to make Best Buy more relevant with
customers and position the company for sustained, profitable returns in the
years ahead.”

Tablets, mobile phones, e-readers and
appliances buoyed U.S. comps during the quarter, but the gains were more than
offset by comp declines in notebooks, gaming, digital imaging and TV.

Specifically, mobile phone comps grew 13
percent, subscriptions and service revenue both increased 11 percent, and U.S. online
sales grew 20 percent year over year.

Gross profit dollars increased 4 percent, but
included a rate decline of 30 basis points due to lower computer repair revenue
and the continuing shift from one-time transactions to ongoing Tech Support
memberships, the company said.

During the quarter the company shut 41 of
the previously announced 50 U.S. big-box stores marked for closure this year,
leaving the chain with 42.4 million square feet of big-box retail space, down
from 42.5 million last year, and revenue of $854 per square foot, unchanged
from 2011.