Best Buy Issues Soft Profit Outlook
May 24 2016 - 08:50AM
Dow Jones News
Best Buy Co. reported revenue for the latest quarter that fell
less than analysts were expecting amid strong appliance sales, but
issued a soft profit forecast for the current quarter and said its
financial chief was stepping down next month.
Shares of Best Buy, up 8.4% so far this year through Monday's
close, dropped 4.1% to $31.65 in premarket trading.
For the current quarter, the company projected adjusted
per-share earnings between 38 cents and 42 cents, compared with 49
cents last year and short of the 50 cents analysts anticipated.
Best Buy also said Sharon McCollam, its chief administrative and
chief financial officer, will step down on June 14, at the
conclusion of the company's annual shareholder meeting. The company
elevated Corie Barry, a 16-year veteran of Best Buy and its current
chief strategic growth officer, to the CFO role, effective as Ms.
McCollam departs.
Ms. McCollam will remain with the company in an advisory
capacity until the end of the fiscal year.
In recent quarters, Best Buy has eked out stronger profit amid
cost cuts and rebounding revenue. A recovering housing market has
helped boost demand for appliances and home theater equipment, and
consumers have snapped up wearable items, such as fitness tracker
Fitbit. Strong growth in those segments helped offset softness in
mobile phones and tablets in the latest quarter.
Sales at existing stores edged down 0.1%, narrower than the 1.6%
decline analysts were expecting, according to Consensus Metrix. The
company had guided for a decline of 1% to 2%.
Over all, for the first quarter, Best Buy reported a profit of
$229 million, or 70 cents a share, compared with $129 million, or
36 cents a share, a year earlier. Excluding certain items, the
company earned 44 cents a share, up from 37 cents a year ago.
Revenue slid 1.3% to $8.44 billion. Analysts polled by Thomson
Reuters expected earnings of 35 cents a share on $8.29 billion in
revenue.
Despite the better-than-expected results, the company backed its
forecast for revenue to remain roughly flat this year.
The "first quarter represents less than 15% of full year
earnings," Best Buy Chief Executive Hubert Joly said in prepared
remarks, "and at this stage we have no new material information as
it relates to product launches throughout the year."
The company logged $29 million in restructuring charges in the
period related to asset impairments and severance, compared with
restructuring charges of $186 million a year ago.
Best Buy lifted its gross profit margin to 25.4% from 23.7% a
year ago.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
May 24, 2016 08:35 ET (12:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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