FINANCE

Best Buy turns profit on lower costs, tax benefit

BY Dan Berthiaume

Minneapolis – Best Buy Co. Inc. swung to a net profit in the first quarter of fiscal 2015 from a net loss in the same period a year earlier, but missed estimates with a drop in sales. The retailer posted net income of $461 million, a big turnaround from a net loss of $81 million.

Best Buy credited its swing to profitability to savings from its Renew Blue cost reduction program and a one-time tax benefit from changes in the structure of its foreign operations. However, net sales fell 3% to $9.03 million from $9.35 million, aided by a 1.9% decline in same-store sales. Analysts had expected a more modest decrease to $9.23 billion in net sales.

Absent any major product launches in what Best Buy expects to be a softening consumer electronics market, the company is expecting same-store sales to be negative in the low-single digits in both the second and third quarters.

“Beyond our financial results, we made progress against our three business imperatives, which are to improve our operational performance; build our foundational capabilities to unlock future growth strategies; and leverage our unique assets to create a differentiated value proposition that is meaningful to our customers and our vendors,” said Hubert Joly, president and CEO of Best Buy.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

Polls

Consumer confidence is high. Is that reflected in your stores’ revenues?

View Results

Loading ... Loading ...
News

Best Buy braces for more comp-store sales decreases in next two quarters

BY CSA STAFF

First quarter same store sales at Best Buy fell a greater than expected 1.3% due to declining sales of consumer electronics and competition from online retailers.

While the retailer experienced growth in computing, gaming and appliances, it was more than offset by declines in other categories, including tablets, services and home theater. President and CEO Hubert Joly focused on the positive, however.

“This quarter reflects continued progress in our Renew Blue transformation. From a financial perspective, we delivered just over $9 billion in revenue and a better-than-expected $0.33 in non-GAAP diluted earnings per share,” said Joly, adding that the company achieved market share gains in the U.S., fueled, in part, by improved price competitiveness.

According to Joly, the company also improved its operational performance, built its foundational capabilities to unlock future growth strategies and leveraged its assets to create a differentiated value proposition to its customers and vendors.

“This progress included leveraging our new ship-from-store and digital marketing capabilities to help drive a 29% increase in domestic comparable online sales; announcing new home theater stores-within-a-store vendor partnerships with Samsung and Sony; launching new mobile installment billing programs; and increasing our annualized Renew Blue cost reductions by $95 million,” explained Joly.

Looking ahead, Best Buy anticipates continued industry-wide sales declines in the second and third quarter in many of the consumer electronics categories in which it competes. The retailer also expects weak sales in the mobile phone category. The company therefore expects comparable sales to be negative in the low-single digits in the next two quarters.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

Polls

Consumer confidence is high. Is that reflected in your stores’ revenues?

View Results

Loading ... Loading ...
News

Record first quarter for Dollar Tree

BY CSA STAFF

Increases in traffic and average ticket resulted in record first-quarter sales growth at Dollar Tree.

Consolidated net sales for the quarter were a record $2 billion, a 7.2% increase compared to $1.87 billion reported for last year’s first quarter. Consolidated comparable store sales increased 2% on a constant currency basis. Adjusted for the impact of Canadian currency fluctuations, the comparable-store sales increase was 1.9%.

Earnings per diluted share for the first quarter were $0.67, a 13.6% increase compared to earnings per diluted share of $0.59 reported for last year’s first quarter.

Discretionary business grew slightly faster than consumables and leading categories for the quarter included candy, check-out products, stationery and seasonal merchandise for Valentine’s and Easter.

“Our stores are currently filled with a balanced mix of consumable products and exciting variety merchandise for Summer Fun. Inventory is clean and fresh and our associates are focused on providing a great shopping experience for every customer, at every store, every day,” said CEO Bob Sasser.

The company continues to expand. During the first quarter, Dollar Tree opened 94 stores, closed six stores and expanded or relocated 28 stores. Retail selling square footage increased 6.8% compared to a year ago, to 44.0 million sq. ft.

Looking ahead, the company estimates sales for the second quarter to be in the range of $1.97 billion to $2.02 billion, based on low-single digit positive comparable-store sales. Diluted earnings per share are estimated to be in the range of $0.58 to $0.64.

Full year sales are now estimated to be in the range of $8.37 billion to $8.54 billion. This estimate is likewise based on a range of low-single digit positive comparable-store sales. Fiscal year 2014 diluted earnings per share are expected to be $2.94 to $3.12. These estimates assume no impact from potential additional share repurchase activity in 2014.

Dollar Tree operated 5,080 stores in 48 states and five Canadian Provinces as of May 3.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

Polls

Consumer confidence is high. Is that reflected in your stores’ revenues?

View Results

Loading ... Loading ...