Revenue in the three months ended March 3 rose to $16.6 billion, Richfield, Minnesota-based Best Buy said today in a statement. The average estimate of 19 analysts surveyed by Bloomberg was $17.1 billion.
Chief Executive Officer Brian Dunn trimmed discounts after the holiday shopping season, sacrificing sales to maintain profitability. The retailer is closing big-box stores and cutting staff jobs, generating savings to spend on promotions and training store employees. The company plans to add 100 smaller-format Best Buy Mobile stores in the U.S. in the current fiscal year.
“Management understands that they are on the slippery slope of losing brand dominance,” Christopher Horvers, an analyst at JPMorgan Chase & Co. in New York, wrote today in a note to clients. He rates the shares neutral, the equivalent of hold. “The company faces the ongoing core challenge: the ability to simultaneously drive sales and gross margin rate.”
Excluding some items, fourth-quarter profit was $2.47 a share. That topped the $2.15 average estimate of 24 analysts surveyed by Bloomberg.
Best Buy fell 9.3 percent to $24.15 at 12:14 p.m. in New York after earlier dropping as much as 10 percent, the biggest intraday decline since Dec. 13. The shares had gained 14 percent this year before today.
The company incurred charges of $2.6 billion in the fourth quarter related to the writeoff of Best Buy Europe’s goodwill and costs from its purchase of Carphone Warehouse Group Plc (CPW)’s share of their U.S. mobile-phone joint venture. As a result, Best Buy posted a net loss of $1.7 billion, or $4.89 a share, compared with net income of $651 million, or $1.62 a share, a year earlier.
The closing of the 50 big-box stores in the U.S., where Best Buy operates about 1,100, is part of planned cost cuts totaling $800 million in the next three years, including $250 million this year. The retailer closed 11 big-box stores in the U.K. last year as well as outlets in Turkey and Shanghai, Dunn, 52, said today on a conference call with analysts.
Best Buy also said it is cutting about 400 jobs in its corporate and support areas and reducing the use of outside consulting services. The savings will go toward a 40 percent increase in employee training and other steps to boost growth such as opening more mobile-phone outlets, Dunn said on the call.
The retailer will expand its Best Buy Mobile stores to 600 to 800 outlets by its fiscal 2016 from 305 now as part of Dunn’s plan to generate revenue from warranties, accessories and connections between phones, tablets and other electronics.
The retailer projected full-year profit excluding some items of $3.50 a share to $3.80 a share. Analysts’ average estimate was $3.70.