MINNEAPOLIS (AP) — Electronics retailer Best Buy Co. returned to a profit in the third quarter as the busy holiday season revs up. But the company says it expects a tough competitive environment during the holiday season.
Its shares fell 6 percent in premarket trading.
Best Buy has been cutting costs, adding employee training and matching online prices to get customers into stores as it faces competition from discounters and online retailers. But this holiday season Is expected to be particularly tough for retailers since its six days shorter than last year and stores are opening up earlier than ever during the Thanksgiving holiday shopping period. Best Buy will open at 6 p.m. on Thanksgiving Day this year, compared with a midnight Friday opening last year.
“In light of our competitors’ decisions to open early for Black Friday, we too are opening our stores at 6 p.m. on Thanksgiving Day and not closing them until late evening on Black Friday,” said Chief Financial Officer Sharon McCollam. “This requires increased promotional offers and an incremental investment in store payroll. But again, it’s table stakes.”
The increased markdowns and store hours may weigh on fourth-quarter gross margin, the percentage of each dollar in revenue a company actually keeps, McCollam said. But that will be offset somewhat by cost cutting efforts.
The Minneapolis-based company said net income totaled $54 million, or 16 cents per share, for the three months ended Nov. 2. That contrasts with a loss of $10 million, or 3 cents per share, a year ago.
Analysts expected 13 cents per share, according to FactSet.
Revenue was nearly flat at $9.36 billion. Analysts expected revenue of $9.37 billion. Revenue in stores open at least one year, a key retail metric, rose 0.3 percent. That includes an increase of 1.7 percent in the U.S. and a decline of 6.4 percent internationally. The online figure rose 15.1 percent.
CEO Hubert Joly said revenue results show that the company’s turnaround strategy is starting to pay off.
“While we remain mindful of the fact that we still have a long way to go, we are pleased with the progress of our Renew Blue transformation efforts,” he said.
Shares fell $2.76, or 6.3 percent, to $40.80 in premarket trading about 90 minutes ahead of the market opening. The stock has more than tripled since the beginning of the year and hit a two-year high last week.
(© Copyright 2013 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)