Best Buy Company Inc.
) dropped 6.6% to $12.85 in the pre-market trading hours today as
investors turned jittery following the lower-than-expected
third-quarter 2013 results.
Earnings of this consumer electronic products retailer came in
at 3 cents a share that dropped drastically by 94% from 47 cents
earned in the year-ago quarter, and also missed the Zacks
Consensus Estimate of 12 cents by miles. This slide challenges
Hubert Joly, the newly appointed Chief Executive Officer, with
the task of completely revamping the operations.
Including one-time items and discontinued operations, the
company reported quarterly loss of 3 cents a share that fell
significantly from 42 cents delivered in the prior-year
Let's Dig Deep
Richfield, Minnesota-based Best Buy's total revenue dropped
3.5% year-over-year to $10,753 million but came ahead of the
Zacks Consensus Estimate of $10,730 million. Comparable-store
sales fell 4.3% compared with a decline of 0.7% in the prior-year
Gross profit slid 9.4% to $2,586 million during the quarter,
whereas gross margin contracted 160 basis points to 24%. Adjusted
operating income plunged 87% to $48 million, whereas operating
margin plummeted 300 basis points to 0.4%.
revenue decreased 4.7% to $7,673 million due to fall in
comparable-store sales and closing of stores. Comparable-store
sales fell 4% during the quarter, reflecting sales declines in
gaming, notebooks, digital imaging and televisions, partially
mitigated by growth registered across tablets, mobile phones,
appliances and eReaders. Domestic segment online revenue jumped
over 10% to $431 million.
The domestic segment's gross profit slipped 9% to $1,855
million during the quarter, while gross margin came in at 24.2%,
down 100 basis points.
revenue came in at $3,080 million marginally down from $3,090
million in the year-ago quarter. Moreover, comparable-store sales
dropped 5.2%, reflecting comps declines across China and Canada,
partially offset by growth witnessed in Europe.
The International segment's gross profit dipped 11% to $731
million during the quarter, while gross margin shrunk 280 basis
points to 23.7%.
Other Financial Details
Best Buy's cash position has plunged 85.1% year-over-year to
$309 million. Total long-term debt was $1,702 million and
shareholders' equity was $4,128 million at the end of the
The company paid a quarterly dividend of 17 cents a share,
totaling $57 million, on October 2. Management now projects free
cash flow generation of $850 million to $1.05 billion for fiscal
2013 down from a range of $1.25 billion to $1.5 billion
Currently, we have a long-term "Underperform" recommendation
on the stock. Moreover, Best Buy, which faces competition from
Wal-Mart Stores Inc.
), holds a Zacks #4 Rank (short-term Sell).
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