10 Updates

Best Buy's Sales Suffer Due To Weak Holiday Season And Bad Weather

Mar 4 2014, 1:38pm CST | by

Electronics retailing giant Best Buy posted revenues of $14.47 billion in Q4 fiscal 2014, a 3% decline as compared to the prior year comparable quarter. (Fiscal years end with January.) Comparable...

Filed under: news

 
 
 

20 weeks ago

Best Buy's Sales Suffer Due To Weak Holiday Season And Bad Weather

Mar 4 2014, 1:38pm CST | by

Electronics retailing giant Best Buy posted revenues of $14.47 billion in Q4 fiscal 2014, a 3% decline as compared to the prior year comparable quarter. (Fiscal years end with January.) Comparable Store Sales for the quarter declined 1.2%. Both domestic and international revenues declined. Additionally, the company saw non-GAAP diluted EPS of $1.24 in Q4, which was better than expected, as it continued to record cost savings through the Renew Blue program.

Best Buy’s gross margin fell by 210 basis points annually to 20.2%. Domestic gross margin was hurt by factors such as incremental investment in structural and promotional pricing, negative impact of the new credit card agreement, increased product warranty-related costs associated with higher claims frequency in the mobile phone category and lower attachment rates on mobile service plans. The international gross profit dipped due to increased promotional activity and a shift to lower margin products in the Canadian business. However, SG&A expenses as a % of revenue decreased to 16.1% as compared to 16.9% in Q3 fiscal 2013. This was attributed to cost savings through the Renew Blue program, better expense management and reduction in labor-associated costs at stores. This led to an annual expansion in operating margins to 3.2% in Q4 fiscal 2014, as compared to a loss of 1.2% in Q4 fiscal 2013.

See our full analysis for Best Buy

Snapshot Of Q4 2014 Results

Best Buy’s sales suffered in the quarter due to declining retail traffic, intense promotion, fewer holiday shopping days, and severe weather. In the consumer electronics category, sales were weaker than expected and the phenomenon of showrooming continued to gain traction among customers who are shifting to the online channel.
/>

Domestic revenue declined by 1.8% annually during the quarter, as a result of a comparable store sales decline of 1.2% (as noted). Excluding the negative impact due to certain short-term measures, the comparable stores sales decreased by 0.6% annually. The growth in computing, appliances and gaming categories was more than offset by decline in other categories such as digital imaging, movies and home theater.

The domestic comparable online sales rose by 25.8%, as compared to 15.1% growth in the previous quarter, owing to factors including higher traffic, growth in average order value, increased inventory at the online channel and higher conversion rate on both the core and mobile sites. We believe this metric will continue to post strong growth in the future, as Best Buy is taking several measures to enhance its e-commerce channel.

The international revenue fell by 9.6% on account of factors such as 1.7% decrease in comparable store sales, store closures in China and Canada, and adverse currency effects. Declining industry trends in Canada and Mexico contributed to the significant drop in comparable stores sales in these markets.
/>
Progress Was Seen On The Renew Blue Program

At the beginning fiscal 2014, Best Buy initiated six key initiatives under the “Renew Blue” program to turn around the company. These include: 1) accelerating online growth; 2) enhancing the multi-channel customer experience; 3) increasing revenue and gross profit per square foot to enhance store space optimization and merchandising; 4) driving down cost of goods sold through increased supply chain efficiencies; 5) continuing to gradually optimize the U.S. real estate portfolio; and, 6) further reducing SG&A expense as a percent of sales. The company made progress against each of these strategic initiatives during the quarter, and will continue to invest in them going forward.

During the quarter, Best Buy saw consumers shifting to the online channel in large numbers. Every metric that the company uses to track the growth of this channel showed improvement. As a result, online sales constituted 12.7% of the total domestic sales, up from 10% last year. The Net Promoter Score which measures satisfaction levels for both customers that buy and don’t buy products, rose by 300 basis points annually. However, this progress also came at a price. Best Buy said that since online sales have a higher mix of lower margin hardware products as compared to high-margin services and accessories, its profitability was affected.
/>

Optimization of floor space was undertaken by devoting more space to profitable product categories such as mobile phones and tablets. In addition, the company realized $200 million in cost savings for the whole year through reduction in its SG&A expense. This resulted in total annualized costs savings of $765 million, which far exceeded the company’s target of $725 million in savings.

Our price estimate of $27.84 for Best Buy is at a 6% premium to the current market price. We will update our valuation shortly in view of the Q4 2014 earnings release.

See More at Trefis | View Interactive Bernstein Research (Powered by Trefis)

Like our charts? Embed them in your own posts using the Trefis WordPress Plugin .

Source: Forbes Business

 
Update
10

6 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

Cambodia's Famous Battambang Circus
KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

6 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

"GOLDEN ASIA" Tokyo Premiere Press Conference
KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken int ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

6 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

Federal Aviation Administration Bans All US Flights To Israel
KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected b ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

6 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, D ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

6 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

INDIA-CHINA-DIPLOMACY-TRADE
PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern states last mo ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

6 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

Government Weekly Cabinet Meeting
KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 mill ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

6 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mustapa Mohamed sa ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

6 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

Iskandar Johor Open - Previews
JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

6 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

EurAsia Cup presented by DRB-HICOM - Day One
PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Scheme 2014 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

6 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

US airlines cancel flights to Israel
Washington, July 23 (IANS) Two major US civil aviation giants, Delta Airlines and US Airways announced Tuesday that they have cancelled flights to Israel due to safety and security concerns.
 
 
China's rotten meat scandal spreads to Japan (Roundup)
Beijing/Tokyo, July 22 (IANS) A rotten meat scandal which led several fast food chains to withdraw some of their most popular dishes in China this week spread to Japan Tuesday, as McDonald's announced it had stopped selling fried chicken.
 
 
Study reports worldwide drop in HIV cases
Sydney, July 22 (IANS/EFE) The number of people with HIV has dropped by 18.7 percent since 2012, according to a report made public at the 20th International AIDS Conference being held in Melbourne.
 
 
China seals McDonald's, KFC supplies after scandal
Beijing, July 22 (IANS) Authorities in China have rushed to seal up suspicious meat products in fast food chains, including McDonald's and KFC, after one of their suppliers was accused of selling stale meat.
 
 
 

Latest from the Network

Cher Lloyd wants to confront Louis Walsh
Los Angeles, July 23 (IANS) Singer Cher Lloyd recently expressed her desire to confront Louis Walsh, who judges "The X Factor", after the latter called her "a spoilt child" sparking a war of words between the two....
Read more on Celebrity Balla
 
Apple posts monster Q3 profit on $37.43 in revenue, beats estimates
Apple’s stock has been soaring lately, up more than 24% over the past three months. Shares took off in late April when Apple announced a 7-for-1 split that would take place in early June, and the stock has kept...
Read more on Apple Balla
 
Israel to destroy Hamas tunnels before ending offensive
Jerusalem, July 23 (IANS) The Israeli army Tuesday said that it will not cease its Gaza offensive before rooting out the "terror tunnels" that Hamas are using to sneak into Israel, as UN Secretary General Ban Ki-moon...
Read more on Politics Balla
 
One Direction to release concert movie in 50 nations
Los Angeles, July 23 (IANS) One Direction band members are planning to release a concert movie in 50 countries in October. Touted to be the "biggest concert movie ever", it will feature footages from their - Where We...
Read more on Celebrity Balla
 
Over 100 candidates to compete for Iraqi presidency
Baghdad, July 23 (IANS) More than 100 candidates are vying for the Iraqi presidency as lawmakers prepare to choose the nation 's new leadership, and build an inclusive government while the country is severely divided...
Read more on Politics Balla
 
Russia ready to join probe into airliner crash
Moscow, July 23 (IANS) Russia is ready to join the international investigation led by the International Civil Aviation Organisation (ICAO) into the crash of the Malaysian Airlines MH17, Moscow said Tuesday. "Russia is...
Read more on Politics Balla
 
Kris Jenner to release cookbook
Kris Jenner is releasing her own cookbook. The 58-year-old matriarch has put together some of her best recipes and top tips for entertaining guests in her new book 'In The Kitchen With Kris: A Kollection of Kardashian-...
Read more on Celebrity Balla
 
Zoe Saldana: My husband's tattoo was 'romantic'
Zoe Saldana thought her husband's tattoo of her face was ''the most romantic thing''. The actress' beau Marco Perego - whom she married last year - had her facial features etched onto his arm and, although she tried to...
Read more on Celebrity Balla
 
Jimmy Kimmel cried at daughter's birth
Jimmy Kimmel cried at the birth of his baby daughter. The chat show host, 46, admits he was reduced to tears when he and his wife Molly McNearney welcomed their first child Jane into the world earlier this month....
Read more on Celebrity Balla
 
Lady Gaga is 'curvy and proud'
Lady Gaga is ''curvy and proud''. The 28-year-old singer - who is known for her bizarre outfits - insists she feels comfortable with her own body and gets satisfaction from flaunting it in front of people. The blonde...
Read more on Celebrity Balla