Q4 Beat Has Best Buy Focusing On Building Momentum
Wednesday March 6th, 2013 - 12:00PM
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Best Buy has announced that its revenues for the 2013 fiscal year ended February 2 were $49.62 billion versus $50.04 billion in the previous year, while comparable store sales fell 7.5%. Operating income was $162 million compared with $980 million in fiscal 2012 while net loss attributable to Best Buy shareholders was $249 million, or 73 cents per diluted share, versus $1.32 billion, or $3.57 per diluted share, in the year earlier.
Fourth quarter revenue came in at $16.71 billion, Best Buy reported, versus $16.67 billion in the year-prior period, with comps down 0.8%. Operating loss was $145 million compared with $121 million in the year-earlier period while net loss attributable to Best Buy shareholders was $409 million, or $1.21 per diluted share, versus $1.82 billion, or $5.17 per dilutes share. However, adjusted for one time items, Best Buy’s fourth quarter earnings per share came in at $1.64 versus $2.18 in the year-earlier period, beating a published Thomson Reuters consensus analyst estimate of $1.54.
Domestic revenue of $12.55 billion in the fourth quarter represented a 0.3% decline versus last year, Best Buy stated. The loss of revenue from 49 big box stores that the company closed earlier in the year drove the decline, but effect of the shutterings was substantially offset by a positive 0.9% comp increase generated by Best Buy units in the United States and incremental revenue from 126 additional Best Buy Mobile stand-alone stores, the company asserted. Best Buy pointed out that fourth quarter comps received a boost estimated at 35 basis points involving a calendar shift in this year’s pre-Super Bowl sales from the first quarter of fiscal 2014 to the fourth quarter of fiscal 2013.
In the fourth quarter, Consumer Electronics sales slipped in the revenue mix to 35% from 38% in the year-prior period. Computing and Mobile Phones gained to 42% from 37% while Entertainment slipped to 12% from 15%. Appliances also gained, up to 5% from 4%, while Services and Other remained the same at 5% and 1% respectively, Best Buy related.
Hubert Joly, Best Buy president and CEO commented about the company’s financial results: “On revenue growth of 0.2%, we delivered non-GAAP diluted earnings per share of $1.64. Adjusted free cash flow for the year reached $965 million as we aggressively reduced inventories and focused on working capital and cash flow management. To deliver these better-than-expected results, renewed momentum in the Domestic business more than offset continued softness in the International business. Fourth quarter Domestic comparable store sales increased 0.9%, with an overall 10 basis point decline in the gross profit rate. Domestic online revenue increased 11%. These results were driven by a compelling assortment of new products in key growth categories, increased ‘blue-shirt” training and higher customer engagement in our retail stores, and impactful ‘traffic-generating’ marketing activities. It was a quarter that was driven, not given, and we are encouraged by the intensity, collaboration and momentum that was generated by both our front line and corporate teams as we began to execute against our Renew Blue initiatives.”
Joly said Best Buy would build on that momentum it has established in 2014, adding, “We remain intently focused on the two problems we have to solve: stabilizing and improving our comparable store sales and increasing profitability across our global businesses. We recognize, however, that fiscal 2014 is a year of transition and that further investment will be required to advance our Renew Blue transformation. I would like to highlight six key priorities that will be pursued in fiscal 2014 that fall under the various pillars of Renew Blue. These priorities are, one, accelerating online growth, two, escalating the multi-channel customer experience, three, increasing revenue and gross profit per square foot through enhanced store space optimization and merchandising, four, driving down cost of goods sold through supply chain efficiencies, five, continuing to gradually optimize the U.S. real estate portfolio and, six, further reducing SG&A costs. In addition, we will focus on driving operational improvements in our International business.”
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