Telecom Signaling Industry News

TMCNet:  Earnings preview: Best Buy 4th quarter results

[February 27, 2013]

Earnings preview: Best Buy 4th quarter results

(Associated Press Via Acquire Media NewsEdge) NEW YORK -- Best Buy Co.'s fourth-quarter results on Friday may give some insight into what new CEO Hubert Joly's plan of action is to revive the struggling consumer-electronics chain. Analysts expect the company to report lower net income on higher revenue.

WHAT TO WATCH FOR: The Minneapolis company said Tuesday that it plans to cut 400 staffers from the headquarters to focus on its core business and simplify its organizational structure. The cuts are the first phase, aimed at eliminating $150 million in expenses, of a $725 million cost cutting plan first announced last November. Best Buy said it will give more details on Friday.

In addition, Thursday is the deadline for chairman Richard Schulze to make an offer for the company. Schulze has said he may make an offer for the company he co-founded, but so far nothing has materialized.

Best Buy has been facing tough competition from discounters and online retailers, as people browse electronics in stores and then go home to buy them more cheaply online, a practice known as "showrooming." To combat this, it has instituted a cost-cutting program, revamped stores and invested in more employee training.

The holiday quarter accounted for about a third of Best Buy's revenue last year.

In January, the chain said that revenue at stores open at least a year fell 1.4 percent for the nine weeks ended Jan. 5. This figure is a key gauge of a retailer's health because it excludes results from stores recently opened or closed.

The company's U.S. performance was flat. While this was slightly below the 0.3 percent increase Best Buy reported in 2011, Joly said in a statement that it was better than the past several quarters.

Best Buy tapped Joly in August to help reverse its slide. Joly has made management changes, including hiring CFO Sharon McCollam in November, and embarked on a turnaround plan.

WHY IT MATTERS: Best Buy is the largest U.S. specialty electronics store and how it does financially can still give some indication of how Americans are spending on discretionary goods, or more broadly, how they feel about the economy.

WHAT'S EXPECTED: Analysts expect earnings of $1.53 per share on revenue of $16.29 billion, according to FactSet.

LAST YEAR'S QUARTER: Best Buy reported earnings excluding one-time items of $2.47 per share on revenue of $16.08 billion.

(c) 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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