{"id":32916,"date":"2016-02-25T17:30:50","date_gmt":"2016-02-25T23:30:50","guid":{"rendered":"http:\/\/news.medill.northwestern.edu\/chicago\/?p=32916"},"modified":"2016-03-01T11:44:42","modified_gmt":"2016-03-01T17:44:42","slug":"best-buy-sees-tough-year-ahead","status":"publish","type":"post","link":"https:\/\/news.medill.northwestern.edu\/chicago\/best-buy-sees-tough-year-ahead\/","title":{"rendered":"Best Buy sees tough year ahead"},"content":{"rendered":"

By Poroma Pant <\/strong><\/p>\n

Best Buy Co. Inc. turned in better than expected fourth quarter results Thursday, but also warned investors that sales and earnings will be under heavy pressure in 2016. <\/p>\n

For the quarter ended Jan 30, the nation\u2019s most prominent electronics retailer\u2019s net income was $479 million, or $1.40 per diluted share, down from $519 million, or $1.46 per share, a year earlier.<\/p>\n

Excluding non-operating items, the company posted adjusted earnings of $1.53 per diluted share, beating analysts estimates that it would earn $1.39 per share. <\/p>\n

<\/p>\n

Revenue fell by 4.1% to $13.62 billion from $14.2 billion a year ago. The Minnesota based consumer-electronics vendor faced challenges in sales at stores open at least twelve months: the so-called \u201cComp-store sales\u201d dropped by 1.7 percent, a worse decline than the 1.3 percent expected by analysts. <\/p>\n

\"Best<\/p>\n

Electronics retail giant faces tough times ahead, following decline in revenue. (Poroma Pant\/MEDILL) <\/div>\n

The company noted that specific elements of the consumer electronics market drove down fourth quarter revenue.<\/p>\n

\u201cStrong performance in health & wearables, home theater and appliances was more than offset by softness in the mobile phone category and continued declines in tablets,\u201d said Hubert Joly, chief executive offer in a conference call with analysts. <\/p>\n

In a statement accompanying the financials release, Joly noted that across the industry, consumer electronics sales (comprised of TVs, computers, and tablets) were down 5.1% for the three months ending Jan 30 2016. <\/p>\n

For the first quarter, Best Buy expects sales to be down 1 percent to 2 percent with total revenue of $8.25 billion to $8.35 billion, compared to the $8.4 billion analysts surveyed by S&P Global Market Intelligence have been expecting.<\/p>\n

“We are expecting revenue declines in the first half followed by growth in the back half,” said Sharon McCollam, chief financial officer said in a statement. <\/p>\n

Consumers ongoing migration to Amazon, and upgrade programs at vendors like Apple, will pose obstacles to the Best Buy\u2019s long term revenue growth, noted orningstar Inc. analyst R.J. Hottovoy .<\/p>\n

Like other \u201cbrick and mortar\u201d chains, the company has come under heavy pressure from online competition. <\/p>\n

\u201cAs key consumer electronics vendors increasingly take products directly to consumers,\u201d Hottovoy wrote in an online commentary, \u201cwe expect many of Best Buy\u2019s competitive advantages, including brand reputation and high traffic retail locations, may fade.\u201d <\/p>\n

While the company appeared to be doing a \u201cgood job\u201d dealing with the challenges of operating in a tough sector, analysts at UBS AG said the headwinds it faces are daunting. \u201cWe don’t think the market will look past these challenges for at least the near-term,\u201d said analyst Michael Goldsmith in a note. <\/p>\n

Annual Net Income of Best Buy 2011-2016 <\/h2>\n

[field name=”chart”]<\/p>\n

Amounts in $ million. (Poroma Pant\/MEDILL) <\/div>\n

The company\u2019s net income for the complete fiscal year was $897 million or $2.56 per diluted share, a 27 percent decrease from $1.23 billion or $3.49 per diluted share the previous year. <\/p>\n

For the full year, the chain reported an adjusted earnings of $2.78 per share on revenue of $39.52 billion, from adjusted earnings $2.60 on a revenue of $40.33 billion the previous year. <\/p>\n

In a separate statement, the company announced that it plans to buy back $1billion worth of its stock over the next two years. It also boosted its quarterly dividend by 22 percent, to 28 cents a share, and issued a onetime 45-cent-a share special dividend. <\/p>\n

In New York Stock Exchange trading Thursday, Best Buy shares increased by 77 cents, or 2.45 percent, to close at $32.24. <\/p>\n

Weak demand for mobile phones added to Best Buy’s woes. (Mike Mozart\/Flickr<\/a>) <\/div>\n","protected":false},"excerpt":{"rendered":"

By Poroma Pant Best Buy Co. Inc. turned in better than expected fourth quarter results Thursday, but also warned investors that sales and earnings will be under heavy pressure in 2016. For the quarter ended Jan 30, the nation\u2019s most prominent electronics retailer\u2019s net income was $479 million, or $1.40 per diluted share, down from […]<\/p>\n","protected":false},"author":268,"featured_media":32924,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27,585],"tags":[1782,1783,1513],"class_list":["post-32916","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-winter-2016","tag-best-buy-inc","tag-consumer-electronics","tag-fourth-quarter-earnings"],"yoast_head":"\nBest Buy sees tough year ahead - Medill Reports Chicago<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/news.medill.northwestern.edu\/chicago\/best-buy-sees-tough-year-ahead\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Best Buy sees tough year ahead - Medill Reports Chicago\" \/>\n<meta property=\"og:description\" content=\"By Poroma Pant Best Buy Co. Inc. turned in better than expected fourth quarter results Thursday, but also warned investors that sales and earnings will be under heavy pressure in 2016. 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