Best Buy Issues Soft Profit Outlook

Best Buy Co. reported revenue for the latest quarter that fell less than analysts were expecting amid strong appliance sales, but issued a soft profit forecast for the current quarter and said its financial chief was stepping down next month.

Shares of Best Buy, up 8.4% so far this year through Monday's close, dropped 4.1% to $31.65 in premarket trading.

For the current quarter, the company projected adjusted per-share earnings between 38 cents and 42 cents, compared with 49 cents last year and short of the 50 cents analysts anticipated.

Best Buy also said Sharon McCollam, its chief administrative and chief financial officer, will step down on June 14, at the conclusion of the company's annual shareholder meeting. The company elevated Corie Barry, a 16-year veteran of Best Buy and its current chief strategic growth officer, to the CFO role, effective as Ms. McCollam departs.

Ms. McCollam will remain with the company in an advisory capacity until the end of the fiscal year.

In recent quarters, Best Buy has eked out stronger profit amid cost cuts and rebounding revenue. A recovering housing market has helped boost demand for appliances and home theater equipment, and consumers have snapped up wearable items, such as fitness tracker Fitbit. Strong growth in those segments helped offset softness in mobile phones and tablets in the latest quarter.

Sales at existing stores edged down 0.1%, narrower than the 1.6% decline analysts were expecting, according to Consensus Metrix. The company had guided for a decline of 1% to 2%.

Over all, for the first quarter, Best Buy reported a profit of $229 million, or 70 cents a share, compared with $129 million, or 36 cents a share, a year earlier. Excluding certain items, the company earned 44 cents a share, up from 37 cents a year ago.

Revenue slid 1.3% to $8.44 billion. Analysts polled by Thomson Reuters expected earnings of 35 cents a share on $8.29 billion in revenue.

Despite the better-than-expected results, the company backed its forecast for revenue to remain roughly flat this year.

The "first quarter represents less than 15% of full year earnings," Best Buy Chief Executive Hubert Joly said in prepared remarks, "and at this stage we have no new material information as it relates to product launches throughout the year."

The company logged $29 million in restructuring charges in the period related to asset impairments and severance, compared with restructuring charges of $186 million a year ago.

Best Buy lifted its gross profit margin to 25.4% from 23.7% a year ago.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

May 24, 2016 08:35 ET (12:35 GMT)

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