Best Buy cuts outlook on disappointing earnings
The electronics retailer says tablet and e-readers sales were strong in the U.S., but those gains were offset by weak TV, gaming, camera and physical media sales.
Best Buy's fiscal second-quarter results fell short of expectations and the company cut its outlook amid "challenges to overall consumer spending and lower consumer electronics industry sales."
Specifically, Best Buy reported second-quarter earnings of $177 million, or 47 cents a share, down from 60 cents a share a year ago. Revenue was $11.34 billion, flat compared to the second quarter a year ago. Wall Street was expecting Best Buy to report second-quarter earnings of 53 cents a share on revenue of $11.47 billion.
In the second quarter, same-store sales were down 2.8 percent from a year ago.
As for the outlook, Best Buy projected fiscal 2012 revenue to be between $51 billion and $52.5 billion, with same-store sales flat to down 3 percent. Wall Street was looking for revenue of $52 billion.
For fiscal 2012, Best Buy said earnings would be between $3.35 a share and $3.65 a share. Those results include a bump from share repurchases that will boost earnings 20 cents a share to 25 cents a share. Excluding share repurchases, Best Buy said its earnings outlook is lower than the $3.30 a share to $3.55 a share before. Wall Street was expecting fiscal 2012 earnings of $3.46 a share.
Among the key data points:
• Online revenue was up 13 percent in the quarter.
• Tablet and e-readers sales were strong in the U.S., but those gains were offset by weak TV, gaming, camera, and physical media sales. Mobile phone same-store sales fell 5 percent because there was a dearth of new phones launched in the quarter.
• Inventory was up slightly from a year ago at $6.4 billion.
• Best Buy ended the quarter with cash and equivalents of $2 billion.
This story was originally published at ZDNet's Between the Lines under the headline "Best Buy earnings disappoint: Sees weak consumer tech spending."