Best Buy Hits on Profit, Falls Shy on Revenue

(Minneapolis Star Tribune/MCT) -

Best Buy Co.’s second-quarter profit was higher than expected, but its sales fell short and executives remained cautious for the second half of the retailer’s fiscal year.

They cited industrywide drops in sales of consumer-electronics products and uncertainty about the timing of product launches from cellphone manufacturers.

“Absent any change in these declining industry trends and with limited visibility to new product launch quantities, we continue to expect comparable sales to decline in the low-single digits in both the third and fourth quarters,” Sharon McCollam, Best Buy’s chief financial officer, said in a statement.

Analysts pressed McCollam and Best Buy CEO Hubert Joly about their caution, but they remained firm. “We don’t live on wishes and hopes here,” McCollam said. “We live on what the data says.”

Meanwhile, the company is uncertain when Apple Inc.’s new iPhone, expected to be announced on Sept. 9, will be available and how constrained the initial supply of it will be.

The company on Tuesday said it earned 44 cents a share from continuing operations adjusted for one-time expenses, well above the 31 cents a share analysts were expecting. Revenue was $8.9 billion, down from $9.3 billion a year ago. Analysts had forecast revenue of $9 billion.

Sales at its U.S. comparable stores fell 2 percent.

In May, when Best Buy reported its first-quarter earnings, executives also said they need more excitement in consumer electronics to drum up more sales. But because of an anticipated dry spell in exciting new-product launches, the company said it expected same-store sales to drop in the low single-digits in the second and third quarters.

As it works to try to stabilize falling sales, Best Buy has been cushioning the bottom line by working to cut about $1 billion in costs as part of its Renew Blue turnaround effort. As of the first quarter, it had cut $860 million.