Best Buy profits beat forecasts

Sat, Mar 2, 2013, 00:00

Best Buy posted fiscal fourth- quarter adjusted profit that topped analysts’ estimates and said the retailer would focus on continuing its turnaround after failing to receive a takeover offer from its founder.

Excluding items such as restructuring costs and charges to write off goodwill for operations in Canada and China, profit in the quarter ended February 2nd was $1.64 a share, the Richfield, Minnesota-based company said yesterday.

Chief executive officer Hubert Joly, who took over in September, has closed stores and matched rivals’ prices to reverse the slide, all while founder Richard Schulze was analysing the company’s financial data in preparation for a potential takeover offer.

Best Buy said it didn’t receive an offer from Mr Schulze by its deadline yesterday.

“It was only one-quarter, but it is hard to find too much to be negative about after their initiatives started to work,” said John Tomlinson at ITG Investment Research in New York.

“I can imagine the behind-the-scene talks regarding Schulze were only a distraction. It allows them to concentrate on the business and move forward.”

Best Buy rose 1.8 per cent to $16.70 in early trading in New York yesterday. The shares have gained 41 per cent this year, the third best performance on the SP 500, trailing only Netflix and Hewlett-Packard. The fourth-quarter net loss narrowed to $409 million, or $1.21 a share, from a loss of $1.82 billion, or $5.17, a year earlier, Best Buy said.

Sales rose 0.2 per cent to $16.7 billion, topping analysts’ average estimate of $16.3 billion and snapping two quarterly declines. Sales by US stores open at least 14 months rose 0.9 per cent, after a 1.1 per cent decline a year earlier.

“The company’s price matching policy has had a positive impact on sales without being overly onerous to margin performance,” said Scot Ciccarelli, an analyst at RBC Capital – (Bloomberg)