Best Buy to Ramp Up China Expansion
Shanghai, China Best Buy Co. said on Friday it would ramp up its expansion in China but would not grow through partnerships with local rivals.
Best Buy will invest substantially and open a large number of stores in China within the next five years, and will launch online sales in the country in the next 24 months, said Bob Willett, CEO of Best Buy International.
Willett denied Chinese media reports that Best Buy was in talks on a possible share swap with GOME Electrical Appliances Holdings Ltd., a top electronics retailer in China.
Last week, Best Buy cut its full-year outlook, citing a softer U.S. economy, but remained ambitious in its expansion plans, aiming to increase the number of its stores in China by about 20% to as many as 193 in its 2009 fiscal year, which ends on March 1 next year.
The new stores planned in China include 20 to 25 Five Star stores and five to eight self-branded stores. All new Best Buy-branded stores will be based in or around Shanghai, where the company opened its first and only such store in China in early 2007.
Best Buy, which bought a majority stake in Jiangsu Five Star Appliance Co. in 2006, will boost its ownership of the company to 100% by the end of 2010 as part of the purchase agreement, Willett said.
Whole Foods reports 31.4% 1Q sales increase
AUSTIN, Texas Whole Foods Market today reported that first quarter sales 31.4% to approximately $2.5 billion. Comparable-store sales increased 9.3% on top of a 7% increase in the prior year. Identical-store sales, excluding five relocated stores and three major expansions, increased 7.1% on top of a 6.2% increase in the prior year.
According to Whole Foods, net income was approximately $39.1 million, and diluted earnings per share were 28 cents. The company estimates the negative impact on net income from Wild Oats was approximately $11.9 million, or 8 cents per diluted share, in the quarter.
“We realize there are a lot of questions out there about how a slowing economy might impact our sales. Historically, our sales have been highly resilient during economic downturns. We attribute our strong sales to many factors, including our loyal core customers and their dedication to a natural and organic lifestyle, our high percentage of perishable product sales, and our extensive selection of high-quality prepared foods that attracts customers trading down from restaurants,” said John Mackey, chairman, ceo, and co-founder of Whole Foods Market. “In addition, we sell a high percentage of relatively small-ticket items, and we are better positioned today than we ever have been from a value perspective. Given our prior experience, strong year-to-date comps, easier year-over-year comparisons, and the increased number of new stores entering the comp base, we are confident in reaffirming our comp guidance of 7.5% to 9.5% for the fiscal year.”
Safeway reports slight 4Q earnings drop
PLEASANTON, Calif. Safeway today reported that net income for its 2007 fourth quarter fell to 301.1 million from $307.9 million in the fourth quarter of 2006. Diluted earnings per share were 68 cents in the fourth quarter of 2007 compared to 69 cents in the fourth quarter of 2006. The company noted that diluted earnings per share in the fourth quarter of 2006 was increased by 8 cents due to various favorable tax items.
The company reported that total sales increased 6.8% to $13.4 billion in the fourth quarter of 2007 compared to $12.5 billion in the fourth quarter of 2006. Safeway said that contributions from Lifestyle stores, increased fuel sales and an increase in the Canadian dollar exchange rate drove this increase. Identical-store sales increased 4.4% in the fourth quarter of 2007. Excluding fuel, identical-store sales increased 2.7%.
“We are pleased with our performance in the fourth quarter of 2007,” said Steve Burd, chairman, president, and ceo. “Excluding the 8 cents tax benefit in the fourth quarter of 2006, our diluted earnings per share increased by 11.5%.”
Net income for the year 2007 was $888.4 million ($1.99 per diluted share) compared to $870.6 million ($1.94 per diluted share) in 2006. Sales increased 5.2% to $42.3 billion in 2007 from $40.2 billion in 2006 primarily because of Safeway’s marketing strategy, Lifestyle store execution, increased fuel sales and an increase in the Canadian dollar exchange rate. Identical-store sales, excluding fuel, increased 3.4%.
For the fiscal year 2008, Safeway expects diluted earnings per share to be in the range of $2.25 to $2.35 per share. Identical-store sales, excluding fuel, are expected to grow 3% to 3.2%.