Best Buy Co Inc posted a better-than-expected profit for the first quarter this year, indicating that recovery efforts of Chief Executive Hubert Joly are beginning to bear fruits and propelling the firm’s stock as high as 8.5% in early trading.
Since getting hired in the fall of 2012, Joly has restructured the firm, removed hundreds of jobs, closed unprofitable shops and bolstered its cash reserves with a view to checking sales declines, Reuters reported.
Best Buy’s sales are still on the decline but the rate of fall as slowed from 29% in the fourth quarter of 2012 to 3.3% in the first quarter ended May 3.
“The new management team is working to untangle the old knot and set up more profitable pathways to customers. We also believe vendors are showing support for BBY’s success,” said David Schick of Stifel.
The firm reported a revised profit of 33% per share, which beat the average analyst estimate of 20 cents, according to Thomson Reuters.
Yet, rising costs of grocery and surging fuel prices in the US are affecting consumers’ capacity on on-essentials such as electronic goods.
As Fox reported, CEO Hubert said the Best Buy had managed to improve its market share in the US, under the support of improved competitive pricing and a bolstered consumer satisfaction stemming from “advice, service and convenience.”
The company’s revenue for the first quarter dropped to $9.04 billion, down from $9.35 billion a year earlier, below analysts’ estimates of $9.2 billion. Same-store sales, a core measure of growth, tumbled 1.9% following declined demand in electronic goods.
The Minnesota-based retailer posted a net income of $461 million or $1.33 per share. A year earlier the company recorded a loss of $81 million or 24 cents per share.
Best Buy predicts a flop in same-store sales in the current quarter and the next on low demand concerns.
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