Best Buy Q2 Income Falls 30%13 Sep, 2011 By: Erik Gruenwedel
Consumer electronics retailer’s earnings hurt by same-store sales declines in TVs, video games and packaged media entertainment
Best Buy Co. Sept. 13 reported second-quarter (ended Aug. 27) net income of $177 million, down 30% from net income of $254 million during the previous-year period.
The Minneapolis-based consumer electronics retailer cited the ongoing economic sluggishness and downward trend in overall CE industry sales for the downturn, underscored by a 2.8% decline in same-store sales (open at least 14 months).
"We're still facing an uncertain macro [economic] environment," CEO Brian Dunn said in a call with analysts.
Sales of televisions, including connected units and 3D, failed to impress with double-digit same-store sales declines. Best Buy continues to focus onsales of larger-screen TVs (from 46-inches), representing 60% of TV sales in the quarter.
"We went into this year with expectations that TV sales would be soft," CFO Jim Muehlbauer said during a call discussing the fiscal results.
Mobile phones stood out as a primary growth segment (despite year-over-year comp decline), along with tablet computers and appliances, with domestic same-store sales up 9%.
Best Buy continues to explore subleasing store space, including a 50% reduction in store space in 30 stores this year. Meanwhile, Best Buy added 12 Five Star CE stores in China, bringing its footprint in the country to 178 stores. Same-store comps in China increased 7%.
Domestic revenue dropped 1.5% to $8.3 billion, while total sales remained flat at $11.3 billion.