By Ilir Shkurti
Best Buy (NYSE:BBY) reported Q1 earnings on Tuesday that beat analyst estimates, but represented a decrease from a year ago. The company posted $0.46 per share compared to $0.53 per share a year ago. On an adjusted basis, EPS was $0.72 a share, which was up on the $0.59 analyst consensus from FactSet.
Strong sales growth for tablets, smartphones, and e-readers wasn't able to offset significant declines in notebooks, gaming, and televisions, the company said. Best Buy saw same-store sales decline 5.3%, which was a deeper fall than the 2.7% that had been estimated by analysts.
"Best Buy is in a turnaround, and the strategic priorities we laid out at the beginning of the year are just the first phase of the changes to come," said Mike Mikan, the company's interim CEO. "We know we have to better adapt to the new realities of the marketplace, and we are creating a long-term plan designed to make Best Buy more relevant with customers and position the company for sustained, profitable returns in the years ahead."
Those new realities represent an ongoing threat from exclusively online retailer Amazon.com (NASDAQ:AMZN), for which Best Buy is often seen as a showroom. The company has made moves to counteract the threat by growing its online presence and reducing its non-performing bricks-and-mortar overhead. The company's domestic online segment tacked on 20% in revenue growth for Q1. In addition, Best Buy closed 41 of the 40 big-box U.S. stores that it had planned to close for fiscal year 2013.
Best Buy has also sought to capitalize on those few areas that are inherent advantages vs. purely online retailers, such as services. Domestic Segment Services revenue increased approximately 11% for the quarter, the company said, including the impact of its mindSHIFT acquisition.
Regardless of the select performing highlights, there is no escaping the fact that the company is trying to fight an uneven battle with increasing online competition. The most challenging part for Best Buy is that it has to continue competing while in between leaderships. The search to replace former CEO Brian Dunn is expected to take no less than nine months.
The leadership shift does represent an opportunity for the company to seek a different direction. Although Dunn left for non-operating reasons, his departure creates a chance to bring someone on board with exactly the right experience to succeed in a digital retail environment.
Shares of Best Buy closed today at $18.57.
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