Minneapolis — Best Buy reported higher corporate revenue, but lower comp-store sales and net earnings for its fiscal first quarter, ended June 2.
Net earnings were $192 million, down 18 percent from $234 million in the prior year’s first quarter.
“Our first-quarter results fell short of our expectations. Strong revenue results from lower-margin products significantly cut into our gross profit rate,” said Brad Anderson, vice chairman and CEO of Best Buy, in a statement. “Yet our customers continued to increase our market share. Our share gains, combined with other indicators we see, show that our core business is healthy.”
Revenue increased 14 percent to $7.9 billion compared with $7 billion for the previous year’s first quarter. The increase reflected the net addition of 230 new stores (including 131 acquired stores) in the past 12 months and a comp-store gain of 3.0 percent. Last year’s first quarter generated comp-store sales gains of 4.9 percent.
Net earnings were $192 million, down 18 percent from $234 million in the prior year’s first quarter.
“Our first-quarter results fell short of our expectations. Strong revenue results from lower-margin products significantly cut into our gross profit rate,” said Brad Anderson, vice chairman and CEO of Best Buy, in a statement. “Yet our customers continued to increase our market share. Our share gains, combined with other indicators we see, show that our core business is healthy.”
Revenue increased 14 percent to $7.9 billion compared with $7 billion for the previous year’s first quarter. The increase reflected the net addition of 230 new stores (including 131 acquired stores) in the past 12 months and a comp-store gain of 3.0 percent. Last year’s first quarter generated comp-store sales gains of 4.9 percent.
"Strong revenue results from lower-margin products significantly cut into our gross profit rate" is putting it mildly. In fact, it's a malaise that is infecting most players in the CE retail business. Tweeter and Circuit City have suffered greatly this past year from the same problem. Best Buy has the momentum due to their size to absorb a lot of punishment to their bottom line, but eventually they too will run out of road. Now is definetely a good time to explore margin building opportunities.
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