Best Buy Posts Meager Q1 Profit Gain
Consumer electronics retailer Best Buy said U.S. sales of laptops, mobile phones and appliances experienced "low double-digit" sales increases in its first quarter, helping to offset declines in gaming, televisions, music and movies.
"There were many positive indicators in the first quarter, highlighted by the excellent performance of Best Buy Mobile," said Best Buy CEO Brian Dunn in a statement. "These indicators, coupled with the business model changes we are making to create better solutions for the millions of connectable devices we sell, give me confidence in our ability to achieve our financial goals this year."
Sales rose 7 percent to $10.8 billion in the first quarter for fiscal year 2011 ended May 29, reflecting the impact of a 2.8 percent increase in store sales and favorable currency exchange rates. U.S. sales totaled $7.9 billion and international sales totaled $2.9 billion.
Despite the rise in sales, Best Buy's profit remained relatively flat. The company made $155 million for the first fiscal quarter 2011, a 1.3 percent increase compared to last year's earnings of $153 million. Including the impact of last year's restructuring charges, diluted earnings per share remained unchanged at 36 cents.
Best Buy's earnings fell short of expectations. Analysts polled by Reuters and Yahoo! Finance expected the company to make 50 cents per share.
Jim Muehlbauer, Best Buy's executive vice president of finance and CFO, admitted that its first-quarter results were "below expectations" but said the company continued to expect "solid top-line growth" over the next year.
Shares of Best Buy dropped about 6 percent to $38.54 in morning trading on the New York Stock Exchange.