Best Buy beats Street, swings to Q3 profit

Minneapolis -- Best Buy reported net income of $54 million during the third quarter amid tight cost controls, compared to a net loss of $10 million during the same period a year earlier, beating analyst predictions for a more modest net income. The chain also warned that its margins may take a hit this quarter in what is shaping up an extremely promotional environment.

The chain posted revenue of $9.36 billion, which was flat with last year and  below analyst expectations of $9.37 billion.

Same-store sales rose 0.3%, including a 1.7% increase in the U.S. and 6.4% decline internationally. Online sales rose 15.1% during the quarter.

Best Buy said it has cut costs, increased employee training and matched competitors’ online prices to sustain store traffic, but increased markdowns and store hours during the holiday season may impact fourth quarter results. Annualized costs have been reduced $505 million in the past 12 months, contributing to earnings.

“Our third quarter top-line results make it clear that our focus on delivering our unique customer promises is starting to pay off,” said Hubert Joly, president and CEO of Best Buy. ”It is also clear that our efforts to control costs and to bring greater efficiency to our operations are improving our profitability. While we remain mindful of the fact that we still have a long way to go, we are pleased with the progress of our Renew Blue transformation efforts.”

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