Best Buy 4th Quarter Loss NarrowsBest Buy Co. said Friday that its fourth-quarter loss narrowed as better sales in the U.S. helped offset weakness abroad, particularly China and Canada.
NEW YORK — Best Buy Co. said Friday that its fourth-quarter loss narrowed as better sales in the U.S. helped offset weakness abroad, particularly China and Canada.
The electronics chain also says a deadline passed without a bid from its co-founder, Richard Schulze, who had been weighing making an offer.
The financial results beat expectations and shares rose more than 5 percent in premarket trading.
Under new CEO Hubert Joly, Best Buy has been working to turn around results as it faces tough competition from online retailers and discounters. It has invested in training employees and implemented a price matching policy.
The results show that Best Buy's new management is making progress, said NBG Productions analyst Brian Sozzi.
He said there are "striking positives" in the results, including better-than-expected gross margin — the percentage of each dollar in revenue a company actually keeps — and an 11.2 percent increase in U.S. online sales.
"Every transaction online was essentially the equivalent of convincing groups of previously disenchanted customers that yes, Best Buy is finally price competitive," Sozzi said.
Earlier this week Minneapolis-based Best Buy announced 400 job cuts at its headquarters as part of a $725 million cost-cutting plan. On Friday the company said it expects to announce more job cuts later this year.
The company also said it plans $700 million to $800 million in capital spending and $150 million to $200 million in other expenses in fiscal 2014 as it invests in its business, mainly online and mobile channels. It plans to revamp Bestbuy.com by fiscal 2015.
Its loss after paying preferred dividends for the three months ended Feb. 2 totaled $409 million, or $1.21 per share, for the three months ended Feb. 2. That compares with a loss of $1.82 billion, or $5.17 per share, in the prior-year quarter.
Excluding restructuring and other costs, adjusted earnings came to $1.64 per share. Analysts expected $1.54 per share, according to FactSet.
Revenue was nearly flat at $16.71 billion, from $16.67 billion last year. Analysts expected $16.29 billion.
U.S. revenue in stores open at least one year rose 0.9 percent, helped by performance from Best Buy's standalone mobile stores. International revenue in stores open at least one year fell 6.6 percent due to weak results in Canada and China.
Best Buy also absorbed restructuring charges of $203 million related to closing stores and severance. It took an $822 million impairment charge to write off worse than expected results in Canada and China as well as $44 million in asset impairments.
"Renewed momentum in the domestic business more than offset continued softness in the International business," Joly said.
For the year, the loss totaled $249 million, or 73 cents per share. That compares with a loss of $1.32 billion, or $3.57 per share, in the prior year.
Revenue edged down less than 1 percent to $49.62 billion from $50.04 billion.
Looking forward, CFO Sharon McCollam said she expects first-quarter results to be "under significant pressure" because there will be a week less of sales compared with last year. Also, people buying TVs before the Super Bowl benefited the fourth quarter this year, compared with the first quarter last year. That helped net income by 14 cents per share in the fourth quarter.
The company is also making investments during the quarter in a price-matching program and revamping its websites.
Schulze, who founded the company in 1966 and is its largest shareholder by far with a 20 percent stake, had been considering a bid or selling his stake since resigning in June, following an investigation that led to the resignation of CEO Brian Dunn due to an inappropriate relationship with a female staffer.
Schulze was given until Feb. 28 to make an offer for the company, but no offer materialized, Best Buy said Friday.
Shares rose 84 cents, or 5.1 percent, to $17.25 in premarket trading. The stock has traded between $11.20 and $27.95 over the past 52 weeks.