Friday February 28th, 2014 - 12:41PM
In the fourth quarter ended February 1, Best Buy posted net earnings of $293 million, or 83 cents per diluted share, versus a loss of $409 million, or $1.21 per diluted share, in the year-earlier period. Revenue was $14.47 billion versus $14.91 billion in the prior-year period.
Operating income was $469 million versus a loss of $181 million in the 2012 quarter.
Comparable store sales fell by 1.2% in the 2013 period, the company related.
For the full year, the company reported, net earnings were $532 million, or $1.53 per diluted share, versus a loss of $249 million, or 73 cents per diluted share, in the earlier annum. Revenue was $42.41 billion versus $43.91 billion in the prior-year period.
Operating income was $1.14 billion versus $169 million in the 2012 period.
Comparable store sales fell 0.8%, the company stated.
Best Buy noted that diluted earnings per share from continuing operations on a GAAP basis were 88 cents for the quarter and $1.98 for the year compared with a 2012 loss of $1.36 and 80 cents in the quarter and full year.
Non-GAAP diluted earnings per share from continuing operations came in at $1.24 for the fourth quarter and $2.07 for the full year 2013, according to the company, versus $1.47 for the period and $2.54 for the full year 2012.
Analysts polled by Thomson Reuters, on average, expected fourth quarter non-GAAP diluted earnings per share of $1.01.
In announcing the results, Hubert Joly, Best Buy president and CEO, commented, “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.
“While we cannot be satisfied with the fourth quarter operating income rate decline of 120 basis points, the decline included the expected approximate 100-basis point negative impact associated with our mobile warranty and new credit card agreement economics that we called out in our third quarter fiscal 2014 earnings release. Thus we were able to materially offset the price investments we have been making with substantial cost savings and other operational improvements.”
As for the full year, he said, “During fiscal 2014, we made substantial progress against our Renew Blue priorities. First, after only one year, we exceeded our original Renew Blue cost reduction target of $725 million by delivering annualized Renew Blue cost reductions totaling $765 million. Second, we have made progress in stabilizing our top and bottom lines. Domestic comparable store sales were virtually flat for the year. Domestic operating income rate, however, was down 70 basis points versus 130 basis points in the previous year. Again, excluding the impact of the increased mobile warranty expense, our cost savings and other operational improvements have materially offset pricing and other Renew Blue investments.
“Third, and very important for our future, we have enhanced how we serve our customers and have been building key foundational capabilities. Most notably, we have: increased Domestic online sales by 20%, significantly increased our price competitiveness, rolled out ship-from-store to more than 1,400 locations, opened 1,400 Samsung and 600 Windows stores-within-a-store and completed the first phase of our floor space optimization, increased our Net Promoter Score by more than 300 basis points, re-launched our loyalty and credit card programs, advanced the transformation of our online platform and customer database, and significantly strengthened our balance sheet through a renewed focus on our core business and a substantially more disciplined capital allocation process.”
Jolly added that the Best Buy Renew Blue turnaround program “is a multi-year journey, and while it is off to an encouraging start, it is still in the early stages. As we move forward, we will continue to address three business imperatives: improving our operational performance, building foundational capabilities necessary to unlock future growth strategies, and leveraging our unique assets to create significant differentiation that is meaningful for our customers and our vendors. Our focus is on executing against these imperatives in pursuit of our long-term non-GAAP financial targets of 5% to 6% operating income rate and 13% to 15% ROIC.”