Best Buy Co. reported better-than-expected results for its first
quarter, helped by strong sales of large-screen TVs, phones and
appliances in its U.S. business.
Shares gained 9.3% in premarket trading Thursday.
Best Buy has eked out stronger profits lately, despite sales
weakness, thanks largely to cost-cutting. In March, the retailer
said it was aiming to cut another $400 million in costs over the
next three years.
Later in March, it said it would shut down its Canadian chain
Future Shop to focus attention on its namesake brand. Best Buy said
Thursday that it has closed 66 Future Shop stores and converted the
remaining 65 into Best Buy stores.
The moves come as the company has warned that weak demand for
consumer electronics and declining prices would weigh on sales for
the first half of this year, rekindling investor worries about the
chain's long-term profitability.
Best Buy has been investing in its showroom floors to compete
with discount stores and websites that use bargain-priced
electronics to drive traffic to other parts of their business.
For the first quarter ended May 2, domestic sales excluding
newly opened or closed locations edged up 0.6%. Excluding the
impact of installment billing, same-store sales were down 0.7%.
Comparable online sales grew 5.3% in the most recent period.
Best Buy has invested in its Web operations amid concerns its
stores were becoming little more than a testing ground for products
ultimately purchased online.
Overall, the company posted earnings of $129 million, or 36
cents a share, down from $461 million, or $1.31 a share, in the
prior-year period.
The quarter's results included $178 million in restructuring
charges.
Excluding special items, per-share earnings were 37 cents.
Revenue edged down slightly to $8.56 billion from $8.64 billion
a year earlier.
Analysts polled by Thomson Reuters projected 29 cents a share in
earnings and $8.46 billion in revenue.
International revenue fell 22%, hurt by currency impacts, the
consolidation of the Canadian stores and continuing softness in the
Canadian consumer electronics industry.
For its current quarter, Best Buy forecast flat low-single digit
revenue growth.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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