Best Buy tops Street as Q4 loss narrows; buyout talks with founder Schulze end
Minneapolis -- Best Buy Co. said that its loss narrowed in the fourth quarter, helped by improved U.S. sales. In a separate release, the company said that the deadline passed without it having received an acquisition offer from its co-founder, Richard Schulze, who had been considering making a bid for the chain.
“The company received no such offer and will continue to focus on its transformation for the benefit of all of its stakeholders,” Best Buy said in a statement.
A report by Reuters said that Best Buy spurned a $1 billion minority investment proposal by Schulze's three private equity partners: Leonard Green Partners, Cerberus Capital Management and TPG Capital. Under the proposal, the three firms would have each received a seat on the board, the report said.
Best Buy reported a loss (after paying preferred dividends) of $409 million for the three months ended Feb. 2. The loss was less than Wall Street had expected, and its shares rose more than 5% in premarket trading on Friday.
Revenue was nearly flat at a better-than-expected $16.71 billion, from $16.67 billion last year. Analysts expected $16.29 billion.
“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," said Hubert Joly, Best Buy president and CEO.
Same-store sales at U.S. stores in the quarter rose 0.9%, boosted by performance from Best Buy's freestanding mobile stores. International revenue in stores open at least one year fell 6.6% on weak results in Canada and China.
For its current fiscal year, Joly said the chain would pursue six priorities: accelerating online growth; escalating the multichannel customer experience; increasing revenue and gross profit per square foot through enhanced store space optimization and merchandising; driving down cost of goods sold through supply chain efficiencies; continuing to gradually optimize the U.S. real estate portfolio; and further reducing SG&A costs.
“In addition, we will focus on driving operational improvements in our International business,” Joly said.
To support its initiatives, the chain expects capital spending be in the range of $700 to $800 million and incremental SG&A investments in the range of $150 to $200 million. These investments will be principally in the areas of online, mobile and the multichannel customer experience, in addition to non-recurring costs associated with the insourcing of IT, which is expected to be completed this year.
For the year, Best Buy reported a loss of $249 million, compared with a loss of $1.32 billion in the prior year. Revenue edged down less than 1% to $49.62 billion from $50.04 billion.