Best Buy says it doesn’t foresee a cheery holiday shopping season as the retailer reported mixed results Tuesday morning.
Its focus on cost-trimming and e-commerce started to pay off in the most recent quarter, but the retailer warned that it expects sales to stay sluggish for another holiday shopping season.
The company’s profit topped analysts’ views in the period, while same-store sales, which fell 2% in its domestic market, were in line with the company’s projections. Looking ahead, Best Buy said it expects a similar drop during its fiscal fourth quarter, which includes the crucial holiday shopping season.
Chief Financial Officer Sharon McCollam said Best Buy expects “continued industry softness,” particularly from the mobile-phone segment ahead of product launches. She also said she expects a similar promotional environment in the latter half of the year, as retailers industrywide continue to fight for cash-strapped consumers’ business.
Meanwhile, the company’s chief executive, Hubert Joly, lauded the most recent results of its turnaround effort, despite ongoing traffic declines and increasing online competition from the likes of Amazon.com.
“Like other retailers and as reflected in this quarter’s performance, we continued to see a shift in consumer behavior: Consumers are increasingly researching and buying online,” Mr. Joly said in a news release. “As a result, traffic to our brick and mortar stores continued to decline, yet our in-store conversion and online traffic continued to increase due to the execution of our Renew Blue strategy, which is in direct alignment with this shift.”
Online sales grew 22 percent in the period, the company said.
In addition to focusing on trying to improve sales and operations in the U.S., the company under Mr. Joly has sought to trim expenses and scale back its foreign interests.
Last year, Best Buy sold its stake in Carphone Warehouse Group PLC’s European business back to Carphone Warehouse in a deal worth about $775 million.
Meanwhile, The Wall Street Journal reported in June that the company was exploring selling its Chinese business, where increased competition has weighed on sales.
In the most recent period, store closures in China helped weigh on the company’s international sales, which declined 6.7 percent on a comparable-store basis.
For the period ended Aug. 2, the company posted a profit of $146 million, or 42 cents a share, down from $266 million, or 77 cents a share, a year earlier. Excluding special items, earnings were 44 cents a share.
Revenue fell 4% to $8.9 billion.
Analysts had projected profit of 31 cents a share and revenue of $8.99 billion, according to projections.
Overhead expenses declined 11% in the quarter, while input costs rose less than 1percent.