Best Buy Co. said Tuesday that its fiscal first-quarter profit dropped 26 percent on restructuring charges as the struggling electronics retailer began implementing a turnaround plan.
Its adjusted earnings and revenue both topped Wall Street's expectations. That's sorely needed good news for the electronics chain as it attempts a restructuring to update its increasingly outmoded "big-box" store model. At the same time, the company is seeking a new CEO after the former top executive left amid scandal. Still, the results show the chain has a long way to go to improve results in a sustainable way.
Best Buy said U.S. sales growth in tablets, mobile phones, e-readers and appliances helped offset declines in notebooks, gaming, digital imaging and TVs during the quarter. But revenue in stores open at least 14 months, which excludes the impact of stores that opened and closed during that period, fell 5.3 percent during the quarter. They were dragged down by weakness in Europe and China.
Best Buy has been shrinking store size and focusing on its more-profitable products such as mobile phones. It's also trying to combat the so-called "showrooming" of its stores -- when people browse at Best Buy but purchase electronics goods elsewhere. In April, it announced a major restructuring that includes closing stores, cutting 400 jobs and trimming $800 million in costs.
The Minneapolis-based company reported net income fell to $158 million, or 46 cents per share, in the three months ended May 5. That's down from $212 million, or 53 cents per share, a year ago.
Excluding restructuring charges, earnings were 72 cents per share. Analysts expected 59 cents per share, according to FactSet.
Revenue rose 2 percent to $11.61 billion, aided by an extra week. Domestic revenue rose 5 percent to $8.82 billion, but international revenue fell 6 percent to $2.79 billion on weakness in China and Europe. Wall Street expected $11.5 billion.
Shares rose 29 cents, or 1.6 percent, to $18.46 on Tuesday.