Best Buy 2Q Profit Falls 19%
Minneapolis On the heels of Monday’s news that Best Buy would acquire online music-sharing site Napster Inc., for about $126.8 million in cash, Best Buy, Inc. announced Tuesday that its second-quarter profit fell 19%.
The company attributed the losses to expenses related to rolling out Best Buy Mobile to all stores to capture cell-phone sales. Best Buy’s sales rose in the quarter, topping analysts’ expectations.
Same-store sales also climbed 4.2%. Revenue also rose 12% to $9.8 billion as consumers bought more flat-panel TVs, laptops and cell phones, the company said.
Best Buy earned $202 million in the quarter ended Aug. 30, down from $250 million in the same quarter a year ago.
Thomson Reuters says analysts expected revenue of $9.67 billion.
Going forward, Best Buy said it is cutting lower-priority expenses in the second half of the year even as it remains on track to invest for growth projects. Best Buy said its increased spending was warranted and credited growth initiatives such as Best Buy Mobile in helping it to gain U.S. market share by 1.6 percentage points.
"We have some work to do in terms of managing our expenses amid a challenging macroeconomic environment," said Brad Anderson, chief executive of Best Buy, in a statement.
The company kept its full-year profit forecast of $3.25 to $3.40 a share, but said second-half same-store sales gains would be lower than the first half's because of the macroeconomic headwinds, the end of the government stimulus checks, and because one week of post-Thanksgiving shopping this year is shifting back to the company's fourth quarter.