Best Buy swings to profit on cost cuts
Minneapolis – Best Buy’s “Renew Blue” cost reduction program appears to be succeeding, as the retailer reported profit instead of loss during the fourth quarter and fiscal year 2013. The improvements came even as revenues in both periods declined compared to the same periods a year earlier.
During the fourth quarter, Best Buy reported net earnings of $311 million, a substantial improvement from its $460 million net loss a year earlier and above Wall Street projections.
For the fiscal year, Best Buy reported net earnings of $523 million, compared to a net loss of $233 million the prior fiscal year.
The main driver of this return to profitability was Best Buy’s “Renew Blue” effort that saved $765 million during the fiscal year, ahead of its cost reduction target of $725 million. The program is designed produces cost savings through optimization of the field and store operating models in the U.S. and Canada, structural changes to certain compensation and benefits programs; and ongoing optimization of returns, replacements and damages. Best Buy is now targeting a total of $1 billion in savings from Renew Blue.
Cost savings came as topline performance sagged. Revenues fell 3% to $14.47 billion from $14.92 billion in the quarter and declined 3% to $42.9 billion from $43.4 billion during the fiscal year. Domestic same-store sales fell 1.2% during the quarter and 0.4% during the fiscal year.
Looking ahead, Best Buy plans to open more “store-within-a-store” partnerships with technology providers such as Samsung and Microsoft. Best Buy expects continuing slightly negative revenue and same-store sales results during the first half of fiscal 2015.
Hubert Joly, president and CEO of Best Buy, said the company managed to perform well in a difficult fourth quarter.
“As we said in our holiday sales release, the fourth quarter was an environment of declining retail traffic, intense promotion, fewer holiday shopping days and severe weather,” said Joly. “In the face of these unusual circumstances, our strategy to be price competitive and provide an improved customer experience resulted in market share gains in a weaker-than-expected consumer electronics market.”
eBay Enterprise extends partnership with Karmaloop
eBay Enterprise, a leading global provider of commerce technologies, retail order management, fulfillment and customer care services and marketing services for retailers and brands, has extended its partnership with Karmaloop to provide marketing solutions that increase conversion.
Karmaloop is a global leader and largest online reseller of more than 500 underground streetwear name brands and fashion products reaching customers in more than 80 countries. Since 2012, eBay Enterprise has managed fulfillment for the company’s Karmaloop.com, BrickHarbor.com, PLNDR.com and Boylston Trading Co. sites.
“With eBay Enterprise, we’re able to engage our customers throughout the entire purchase path,” said Chris Mastrangelo, COO, Karmaloop. “We’ve experienced great success with their fulfillment services and have engaged with the eBay Enterprise Marketing Solutions team for usability, analytics, user experience strategy and creative to support optimizing our site experience and drive greater conversion. We’re excited to expand our relationship with them.”
“An optimized user experience that addresses consumer behavior and shopping need is vital to turning today’s hyper-connected consumers from browsers to buyers. Our collaborative efforts with the Karmaloop team will deliver an enhanced consumer experience their customers will love, driving higher conversion and helping Karmaloop grow its business,” states Steve Denton, vice president for eBay Enterprise Marketing Solutions.
Starbucks joins Fisherman’s Wharf in Jupiter, Fla.
Aventura, Fla. — Starbucks has signed a long-term lease at The Shops at Fisherman’s Wharf in Jupiter, Fla., according to the property’s owner, Elion Partners. Avison Young represented Starbucks in the transaction. Atlantic Retail Properties represented Elion Partners.
The news comes a few weeks following the announcement that The Fresh Market will anchor the center.
Elion Partners acquired the property in August 2013 and undertook a multimillion-dollar redevelopment plan. The improvements included the construction of a new 20,900-sq.-ft. building for The Fresh Market, renovations to the two existing buildings, significant sidewalk upgrades and new parking.
When complete, the center will resemble a European village with a pedestrian-friendly setting. The center’s existing retailers have remained open throughout the remodeling period.
Atlantic Retail Properties is handling the retail leasing, and Transwestern is the property management firm.