Best Buy Reports Q3 Loss, Launches Revival Plan
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MINNEAPOLIS-Declining sales and rising expenses combined to push Best Buy into the red in its fiscal third quarter, to the tune of $10 million, in what President and CEO Hubert Joly described as a "clearly unsatisfactory" performance.
At a conference last week with the retail analysts and investors, Joly outlined a set of priorities to reinvigorate the consumer electronics retailer, called Renew Blue. Speaking about the third-quarter results in a Best Buy statement issued today, he said, "The results we are reporting today only strengthen our sense of urgency and purpose."
Net sales in the quarter, which ended on Nov. 3, fell 3.5 percent to $10.8 billion, including fall of 45.3 percent in same-store sales. Best Buy said it saw declines in same-store sales of notebooks, gaming products, digital-imaging products and televisions in the quarter, offsetting gains in mobile phones, appliances and tablets/e-readers.
Selling, general and administrative expenses rose 2.7 percent in dollars and 104 basis points as a percentage of sales to 23.6 percent. Gross margin was off 160 basis points, finishing the quarter at 24 percent.
The Renew Blue priorities Joly outlined last week include improving the shopping experience both in store and online, developing a leading-edge multichannel shopping experience, investing more in digital, providing new solutions and services to further engage customers, attracting and developing new leaders and energizing employees, working with vendors to drive product value, increasing Best Buy's return on invested capital, driving higher same-store sales through improving retail execution, achieving cost savings and leading in making the world a better place through recycling efforts, increasing teenagers access to technology and enhancing lives in its local communities.
"Our goal is simple," Joly said in a separate statement announcing last week's analyst and investor meeting. "It is for Best Buy to thrive as the preferred authority and destination for technology products and services."