Best Buy Q2 Profit Plummets 45%26 Aug, 2014 By: Erik Gruenwedel
Consumer electronics giant sees revenue drop 4% due to online purchase trends and softness in mobile phones
Best Buy Co. Aug. 26 reported second-quarter (ended Aug. 2) net income of $146 million, which was down about 45% from net income of $266 million during the prior-year period. Revenue declined 4% to $8.8 billion.
In U.S. operations, Best Buy saw operating income drop about 39% to $258 million, compared with $420 million a year ago. Revenue dipped 2.5% to $7.5 billion.
The Minneapolis, Minn.-based retailer attributed the declines to ongoing consumer trends purchasing products online and not in stores, as well as softness in categories such as mobile phones — the latter largely due to anticipated new product launches in the fall.
Indeed, same-store domestic sales dipped 2%.
“Industry-wide sales are continuing to decline in many of the consumer electronics categories in which we compete,” CFO Sharon McCollam said in a statement. “Therefore, absent any change in these declining industry trends and with limited visibility to new product launch quantities, we continue to expect comparable sales to decline in the low-single digits in both the third and fourth quarters.”
Despite reduced shelf space dedicated to packaged media, Best Buy remains a highly visible retail presence for Blu-ray Disc and DVD movies and TV shows. It also sells content through its online CinemaNow platform.
Meanwhile, CEO Hubert Joly said Best Buy is seeing success increasing online sales at BestBuy.com by leveraging distribution to customers through local retail stores.
“Looking ahead, our goal is to continue to create a differentiated multi-channel customer experience such that every interaction customers have with us, regardless of channel,” Joly said in a statement. “In support of this, we will be intensifying our investments in customer-facing initiatives across both channels in the back half of the year.”