RICHFIELD, Minn. (AP) — Best Buy's shares fell Tuesday after the nation's largest consumer electronics retailer reported a revenue shortfall in the second-quarter revenue, as people increasingly shop online.
It also said an important sales figure would continue to decline in the final two quarters of its fiscal year.
Best Buy said its second-quarter net income fell 45 percent from a year earlier, when it benefited from a $229 million legal settlement. But excluding that settlement, results topped analysts' estimates.
Best Buy's shares declined nearly 7 percent in afternoon trading Tuesday.
Like many retailers, Best Buy is drawing fewer customers into its stores as shoppers increasingly buy and research on their PCs or mobile devices. But the electronics business also has its own specific problem — downward pressure on prices ahead of expected product launches such as the next generation of iPhones.
Under CEO and President Hubert Joly, Best Buy has focused on cutting costs, investing in its e-commerce division and offering more services like shipping goods from its stores directly to buyers, measures that are starting to yield results.
The company said that online sales surged 22 percent in the quarter, and Best Buy was able to convert more browsers at the store to buyers.
For the second half of the year, the company is counting on its new Samsung and Sony home theater sections, which were rolled out in more than 800 stores in the quarter.
It also said it's in the early stages of being able to personalize e-mail marketing messages to shoppers. Earlier in the year, it rolled out its service that enables it to ship items directly to shoppers in all 1,400 stores.
In an interview with The Associated Press, Joly said he's not focusing on increasing traffic to stores.
"My attention is growing the top line of the company," he said. A big emphasis is increasing online sales growth, because that's where shoppers start, he says.
The Richfield, Minnesota-based company earned $146 million, or 42 cents per share, for the period ended Aug. 2. That compares with $266 million, or 77 cents per share, a year earlier.
Stripping out certain items, earnings were 44 cents per share.
That easily beat the 31 cents per share expected by analysts surveyed by Zacks Investment Research.
Revenue dropped to $8.9 billion from $9.27 billion. Wall Street forecast $8.97 billion in revenue.
Sales at domestic stores open at least a year declined 2 percent. This figure is considered an important measurement of a retailer's operating performance because it excludes the effects of expansion.
"Industry-wide sales are continuing to decline in many of the consumer electronics categories in which we compete," Chief Financial Officer Sharon McCollam said in a statement. She also noted that Best Buy is seeing some weakness in mobile phones ahead of anticipated product launches.
The company expects revenue at stores open at least a year to continue to be down in the low single digits for the third and fourth quarter.
Best Buy Co.'s share fell $2.16, to $29.83.
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