Best Buy posts 3Q profit, sales flat
Posted at: 11/19/2013 3:05 PM
By MAE ANDERSON
(AP) NEW YORK - Best Buy says it Is committed to "winning" the holiday season with price matching, doorbusters and deals as well as its earliest ever opening hours on Thanksgiving _ even if that means profit pressure for the electronics retailer in the fourth quarter.
Best Buy CEO Hubert Joly has been cutting costs, adding employee training and matching online prices to get customers into stores as it faces competition from discounters and online retailers.
On Tuesday the Minneapolis company reported it returned to a profit in the third quarter as the busy holiday season revs up. But the company says it expects a tough competitive environment during the last two months of the year, which can account for up to 40 percent of a retailer’s annual revenue.
Best Buy and other retailers have been trying to combat so-called "showrooming," when customers browse in stores but buy items more cheaply online. Lately, Best Buy has begun to embrace the term, however. TV ads that began running in November tout the stores as "Your ultimate Holiday showroom."
"We want to win the mind and wallet of the customer," said CEO Hubert Joly in a phone interview with The Associated Press.
Part of that strategy is opening at 6 p.m. on Thanksgiving Day this year, compared with last year’s midnight Friday opening, the busy shopping day known as Black Friday.
Joly said that while Thanksgiving opening hours are not ideal, the company had little choice once competitors said they would be open on Thanksgiving. Target plans to open at 8 p.m. and Wal-Mart Stores, which are usually open during the holiday, will start offering their Black Friday deals at 6 p.m. on Thanksgiving.
Best Buy said that the tough competitive environment could lead to profit pressure in the fourth quarter, but called that "table stakes" for getting shoppers’ attention.
The Minneapolis-based company said net income for the three months ended Nov. 2 totaled $54 million, or 16 cents per share, for the three months ended Nov. 2. That contrasts with a loss of $10 million, or 3 cents per share, a year ago.
Analysts expected 13 cents per share, according to FactSet.
Revenue was nearly flat at $9.36 billion. Analysts expected revenue of $9.37 billion. Revenue in stores open at least one year, a key retail metric, rose 0.3 percent. That includes an increase of 1.7 percent in the U.S. and a decline of 6.4 percent internationally. The online figure rose 15.1 percent.
Shares fell $3.69, or 8.5 percent, to $39.87 in afternoon trading. The stock has more than tripled this year and reached a two-year high last week.
(Copyright 2013 by The Associated Press. All Rights Reserved.)