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Best Buy Q3 Earnings Jump 337%
It earned $227 million during the quarter ended Nov. 28, compared with $52 million in the year-ago period.
Best Buy more than tripled its profits during a better-than-expected Q3 2010 and raised its full-year expectations. However, it also predicts a Q4 dip.
The big-box electronics retailer earned $227 million during Q3 2010, ended Nov. 28 2009, marking a 337 percent increase over the $52 million earned in the year-ago period. It reports rises in traffic and average ticket revenue.
There was a surge in netbook computers, flat-panel TVs, mobile phones and appliance sales, Best Buy reports. The No. 1 U.S. electronics retailer also began selling fitness and DJ equipment during the quarter.
In Q4, however, Best Buy expects netbook computer and low-priced TVs — categories with low gross profit rates — to drag down revenues.
During the year-ago period, No. 2 U.S. electronics retailer Circuit City was still in business. "We believe Best Buy continues to benefit from share gains from the liquidation of Circuit City," wrote Citi Investment Research analyst Kate McShane in a note published by the Associated Press.
Best Buy, however, isn’t alone in its battle for Circuit City’s former customers.
Walmart and Sam’s Club recently rolled out an electronics installation program with partner NEW Customer Service Companies, which appears to compete directly with Best Buy’s Geek Squad.
Smaller chains, such as Hhgregg, also recognize an opportunity to gain market share.
“Despite its [Best Buy’s] market share gains and strong inventory management, we expect a difficult macro environment will continue to pressure margins over the next year while competition remains intense from regionals, discounters and club stores," McShane wrote.
The big-box electronics retailer earned $227 million during Q3 2010, ended Nov. 28 2009, marking a 337 percent increase over the $52 million earned in the year-ago period. It reports rises in traffic and average ticket revenue.
There was a surge in netbook computers, flat-panel TVs, mobile phones and appliance sales, Best Buy reports. The No. 1 U.S. electronics retailer also began selling fitness and DJ equipment during the quarter.
In Q4, however, Best Buy expects netbook computer and low-priced TVs — categories with low gross profit rates — to drag down revenues.
During the year-ago period, No. 2 U.S. electronics retailer Circuit City was still in business. "We believe Best Buy continues to benefit from share gains from the liquidation of Circuit City," wrote Citi Investment Research analyst Kate McShane in a note published by the Associated Press.
Best Buy, however, isn’t alone in its battle for Circuit City’s former customers.
Walmart and Sam’s Club recently rolled out an electronics installation program with partner NEW Customer Service Companies, which appears to compete directly with Best Buy’s Geek Squad.
Smaller chains, such as Hhgregg, also recognize an opportunity to gain market share.
“Despite its [Best Buy’s] market share gains and strong inventory management, we expect a difficult macro environment will continue to pressure margins over the next year while competition remains intense from regionals, discounters and club stores," McShane wrote.
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About the Author
Tom LeBlanc, Senior Writer/Technology Editor, CE Pro
Tom has been covering consumer electronics for six years. Before that, he wrote for the sports department of the Boston Herald. Migrating to magazines, he was a staff editor for a golf publication and an outdoor sports publication. Now, as senior writer/technology editor of CE Pro magazine since 2003, he dabbles in all departments and offers expertise in marketing. Follow him on Twitter @leblanctom.
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