Minneapolis - Weak demand for 3D and IPTVs, and a $222 million restructuring charge to close stores in China and Turkey, led to a 16.4 percent profit decline for Best Buy during its fiscal fourth quarter.
Net earnings, unadjusted for the one-time charge, totaled $651 million for the three months, ended Feb. 26, on net sales of $16.3 billion. Revenue slipped 1.7 percent as comp-store sales slid 4.6 percent worldwide.
"Overall demand for key consumer electronics products was a challenge for the industry last year," CEO Brian Dunn said in a statement. But the company managed to "partially mitigate these challenges and build critical capabilities for profitable growth," he said, including continued growth in connectivity and improvements in its online and international businesses.
In the U.S., fourth-quarter revenue slipped 3.7 percent to $12.1 billion and comp-store sales fell 5.5 percent. Operating income declined 10.3 percent to $986 million.
Broken out by category, comps for CE, the company's largest category, declined 6.5 percent, home office comps slipped 2.5 percent, and entertainment hardware and software fell 14.3 percent.
The declines were largely attributed to weak consumer demand for advanced TVs and soft sales of netbook computers, compared with the year-ago period when Windows 7 was launched.
The declines were partially offset by a low double-digit comp increase in mobile phones, driven by growth in smart phone sales.
Other gainers included appliances, up 6.5 percent; services -- comprised of extended warranties, service contracts, computer-related services, product repair, and delivery and installation of home theater, mobile audio and appliance products -- up 7.5 percent; and online sales, up 11 percent.
Best Buy estimates that it lost market share during the quarter due to early holiday promotions by competitors and the high market-share levels it commanded during the prior-year period.
For the full year, revenue rose 1.1 percent to $50.3 billion, and net earnings slipped 3 percent to $1.3 billion.
Looking ahead, the company expects that "challenges in the macro environment will continue to impact consumer spending within the retail and CE industries," CFO Jim Muehlbauer said, resulting in full-year revenue gains of 1 percent to 4 percent in 2011, and comp sales that will be flat to down 3 percent.
Muehlbauer said this year Best Buy will continue to drive growth in profitable areas, focus and restructure its international portfolio to enhance returns and improve its capital allocation strategy, and control costs. The company is budgeting for about $800 million in capital expenditures.