Connect to share and comment
By Dhanya Skariachan
(Reuters) - Best Buy Co Inc reported weak quarterly sales on Tuesday and warned that a slew of investments to entice shoppers could squeeze profits in the near term.
The news overshadowed its better-than-expected first-quarter profit and sent shares of the world's largest consumer electronics chain down 4 percent in premarket trading.
Net earnings from continuing operations fell to $97 million, or 29 cents a share, from $169 million, or 49 cents a share a year earlier. Excluding restructuring and other charges but including Europe, it earned 36 cents a share, beating the analysts average estimate of 25 cents, according to Thomson Reuters I/B/E/S.
Under CEO Hubert Joly, who took the helm last autumn, it has been matching rivals' online prices, dedicating more in-store space to faster-growing products such as smartphones and tablets, and investing in employee training and revamping stores.
Joly has also removed layers of management, cut jobs, closed some underperforming stores and decided to shed non-core assets such as its stake in a European joint venture with Carphone Warehouse Group to lower costs.
The results showed that Best Buy might need to cut more costs to be able to compete more effectively with the likes of Wal-Mart Stores and Amazon.com.
Its sales fell 9.6 percent to $9.38 billion. The figure was not comparable to the available analysts' estimate as the company's figure excluded Europe and analysts had included it in their estimate. Sales at stores open at least 14 months fell 1.3 percent.
Best Buy tied the revenue weakness partly to a shift in the timing of Super Bowl-related sales. Football's Super Bowl took place on February 3, when the first quarter began, so pre-game sales of big-screen televisions happened in the fourth quarter.
(This version of the story has been corrected in the penultimate paragraph to say that sales are not comparable to available estimate)
(Reporting By Dhanya Skariachan; Editing by Maureen Bavdek)