* First quarter adj profit $0.33/shr vs est $0.20
* Management team turnaround efforts working-analyst
* Expects same store sales to fall in Q2, Q3
* Sees lower demand for electronics, especially mobile
* Shares rise as much as 8.5 pct
(Adds details, updates share price)
By Siddharth Cavale
May 22 Best Buy Co Inc reported a
better-than-expected quarterly profit, showing signs that Chief
Executive Hubert Joly's turnaround efforts were progressing and
sending the company's shares up as much as 8.5 percent in
Since joining in the fall of 2012, Joly has removed layers
of management, eliminated hundreds of jobs, closed unprofitable
stores and boosted Best Buy's cash reserves in efforts to stem
While the company's sales are still falling, the rate of
decline has slowed from 29 percent in the fourth quarter of 2012
to a 3.3 percent fall 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," Stifel
analyst David Schick said in a note. "We also believe vendors
are showing support for BBY's success."
The company posted an adjusted profit of 33 cents per share,
which topped the average analyst estimate of 20 cents, according
to Thomson Reuters I/B/E/S.
However, rising grocery bills and higher fuel costs in the
United States are weighing on consumers' ability to spend on
discretionary items such as electronic goods.
Sears Holdings Corp on Tuesday said gross margins
in its U.S. business fell 2 percentage points for the quarter
due to low demand for home appliances.
Best Buy expects same-store sales to fall in the current
quarter and the next on lower demand for many consumer
electronics, and especially for mobile phones as shoppers were
waiting to buy new models, the company said.
Apple Inc is expected to launch the latest
iteration of its iPhone in September and Amazon.com Inc
is rumored to unveil its first smartphone in September.
Best Buy's sales at stores open for at least 14 months fell
1.9 percent in the first quarter and the company said it
expected same-store sales to fall in the low-single digits
percentage range in the second and third quarters as well.
Total revenue fell 3.3 percent to $9.04 billion. Same-store
sales in the United States fell 1.3 percent, steeper than the
0.9 percent fall analysts had expected, according to research
firm Consensus Metrix.
"We are encouraged that aggressive internal initiatives will
persist; however, we are far less optimistic that sales trends
will improve substantially any time soon," Oppenheimer & Co
analyst Brian Nagel said in a note.
Best Buy's shares were up 5 percent at $26.64 in morning
trading on Thursday. They hit a high of $25.90 earlier.
(Editing by Maju Samuel and Savio D'Souza)