Best Buy Q1: Beats estimates after European exit
After only recently pulling out of the U.K. and European market, Best Buy was expected to report significantly lower earnings for its latest financial quarter.
The U.S. consumer electronics retailer reported first quarter revenue of $9.38 billion, or 32 cents a share, a decline of 9.6 percent on the same quarter a year ago.
Non-GAAP earnings were 32 cents a share.
Wall Street was expecting 25 cents per share on revenue of $10.65 billion — down from 47 cents per share on revenue of $11.61 billion on the same quarter a year ago.
The retailer also noted that it ended the quarter with $908 million in cash and equivalents, a 34 percent decline from the year-ago quarter.
Best Buy issued a quarterly dividend of 17 cents per common share outstanding, or $58 million in total.
Best Buy president and chief executive Hubert Joly highlighted some key points for the quarter, noting Samsung's move to establish in-store shops in its retail outlets. Best Buy's pull-out of the European market after a spectacular fail in the region was also highlighted. The company left the EU after it sold a 50 percent stake in its joint-venture business to the U.K.'s Carphone Warehouse in April.
Joly elaborated in prepared remarks:
Looking ahead, we remain focused on making progress on our Renew Blue priorities announced last November and reiterated in March. During the second quarter, we will, in particular, complete the deployment of the Samsung Experience Shops and make significant progress in our efforts to optimize the allocation of our retail floor space to more attractive product categories, so as to increase revenue and operating profit per square foot
Samsung's push into the retail space has provided a floor for the Korean electronics giant, but Best Buy warned of hurdles ahead for the coming quarter.
Best Buy and Samsung reached an agreement to establish Samsung Experience Shops in its retail stores. This has begun to roll out, as not only the major competitor to Apple in the online retail and market share space, but now in-stores. Samsung continues to aggressively target the U.S. audience by aligning itself with one of the U.S.' major retail stores.
Joly noted: "During the second quarter, we will, in particular, complete the deployment of the Samsung Experience Shops and make significant progress in our efforts to optimize the allocation of our retail floor space to more attractive product categories, so as to increase revenue and operating profit per square foot."
However, Best Buy chief financial officer Sharon McCollam warned that Samsung's in-store impact on its floor space is expected to have "operational impacts" during the second quarter.
By the numbers:
- 15 stores closed in Canada last year, leading to store sales declining by 2.8 percent
- Domestic online revenue increased by 7.1 percent to $498 million
- Comparable online sales increased 16.3 percent thanks to increased traffic and higher conversion across its online platforms
- 50 percent sold in its Best Buy Europe venture, created in 2008, for approximately $775 million
Year to date, Best Buy's shares have risen by 126 percent. In pre-market trading on Tuesday, an hour after its earnings release, shares were down by around 3 percent.