Best Buy Reports 3Q Net Income Jump, Profit Margin Fall
New York City, Best Buy Co. reported net income of $150 million for the fiscal third quarter ended Nov. 25, compared with $138 million a year earlier. Comp-store sales rose 4.8% for the quarter. The company also said revenue rose 16% to $8.47 billion, beating analysts’ average forecast of $8.45 billion. The addition of 227 new stores added during the past 12 months contributed to this gain.
Best Buy said its gross profit rate for the third quarter was 23.5% of revenue, down from 24.4% a year earlier.
Factors including increased sales of lower-margin products, such as notebook computers and video-game consoles, and hefty promotions during the Thanksgiving holiday shopping weekend, are likely attributed to the decline, according to the company.
Wal-Mart Reopens Search for Ad Agency
Bentonville, Ark., Wal-Mart Stores has reopened its search for an advertising agency of record, according to a report in the Kansas City Business Journal. The news comes just days after Julie Roehm, senior VP of marketing communications at Wal-Mart, abruptly left the company. She had led Wal-Mart’s agency review and was responsible for the decision to fire Wal-Mart’s longtime agency, Kansas City-based Bernstein-Rein Advertising Inc.
In October, Wal-Mart announced it had hired Interpublic Group’s DraftFCB to serve as its agency of record and Aegis Group’s Carat USA to help with marketing. Bernstein-Reif had handled the majority of Wal-Mart’s estimated $580 advertising portfolio for more than 30 years. The company is leading Wal-Mart’s holiday campaign and remains under contract through Dec. 31. It was uncertain whether Bernstein-Rein would attempt to win back the Wal-Mart account.
Blockbuster Gives Free Rentals to Netflix Clients
Los Angeles, Blockbuster began offering free in-store rentals to subscribers of on-line rival Netflix on Tuesday as it tries to take market share from Netflix and reach its year-end subscriber goal, according to a report by Reuters. Netflix subscribers can get one free rental at Blockbuster stores for each address label they bring in from their Netflix mailing envelopes.
The offer to Netflix subscribers, which runs until Dec. 21, comes after Blockbuster began allowing subscribers to its own on-line rental service to swap DVDs they received in the mail at Blockbuster stores.
The program, called Total Access, highlights the main difference between the two competitive services: Blockbuster has stores where consumers can immediately satisfy a desire for a particular movie.