Best Buy Swings To Q4 Profit, Tops View

(RTTNews) - Aggressive cost cutting measures helped consumer electronics retailer Best Buy Co., Inc. (BBY) turn to profit for the fourth quarter despite sluggish holiday sales.

Adjusted earnings per share from continuing operations topped analysts' expectations, while quarterly revenues missed estimates as comparable store sales declined, the company announced Thursday.

"As we said in our holiday sales release, the fourth quarter was an environment of declining retail traffic, intense promotion, fewer holiday shopping days and severe weather. In the face of these unusual circumstances, our strategy to be price competitive and provide an improved customer experience resulted in market share gains in a weaker-than-expected consumer electronics market," President and CEO Hubert Joly said in a statement.

The Richfield, Minnesota-based retailer, which is also known as the 'big blue box' because of the prominent design on Best Buy stores, reported net earnings of $293 million or $0.83 per share for the fourth quarter, compared to a net loss of $409 million or $1.21 per share in the prior-year quarter.

Earnings from continuing operations for the quarter was $310 million or $0.88 per share, compared to a loss of $461 million or $1.36 per share last year. Results for the year-ago quarter included goodwill impairment charges of $2.42 per share.

Excluding charges, adjusted earnings from continuing operations was $436 million or $1.24 per share, compared to $499 million or $1.47 per share for the year-ago quarter.

On average, 24 analysts polled by Thomson Reuters expected the company to report earnings of $1.01 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the quarter decreased to $14.47 billion from $14.92 billion in the same quarter last year. Twenty-one Wall Street analysts had a consensus revenue estimate of $14.66 billion for the quarter.

Best Buy reported that its total comparable store sales declined 1.2 percent on top of 1.4 percent drop last year.

Best Buy's domestic revenues decreased 1.8 percent to $12.30 billion, with comparable store sales drop of 1.2 percent. Comparable online sales increased 25.8 percent to $1.57 billion.

International revenues also declined 21.3 percent to $2.17 billion, with comparable store sales drop of 1.7 percent.

For fiscal 2013, the company reported net earnings of $532 million or $1.53 per share, compared to a net loss of $249 million or $0.73 per share in the prior year.

Earnings from continuing operations for the quarter was $687 million or $1.98 per share, compared to a loss of $271 million or $0.80 per share last year. Excluding charges, adjusted earnings from continuing operations was $722 million or $2.07 per share, compared to $863 million or $2.54 per share for the year ago.

Revenue for the full year decreased to $42.41 billion from $43.91 billion in the previous year. Comparable store sales declined 0.8 percent.

Analysts expected the company to report full-year 2013 earnings of $1.84 per share on annual revenues of $42.71 billion.

Looking ahead, the company said its expects revenue and comparable store sales to remain slightly negative, similar to the fourth quarter, in the first half of the year, citing overall economic concerns.

The company noted that it has already exceeded the $725 million North American cost reduction opportunity, and its now increasing the target to $1 billion.

The company will lay off around 2,000 managers as part of its cost cutting plan, the New York Post reported today.

BBY closed Wednesday's regular trading session at $25.82, up $0.28 on a volume of 14.60 million shares. In the past 52-week period, the stock has been trading in a range of $15.75 to $44.66.