Cost cutting helped Best Buy the retailer of consumer electronics to record a profit that was bigger than expected during the first quarter.
However, sales were weak as consumers hold off for the launches of new products including tablets and smartphones that are scheduled for this fall.
Adjusted earnings exceeded expectations and the company stock was up over 5% in early Friday trading. However, sales were short of estimates by Wall Street.
Best Buy announced it expects revenue for stores opened at least 13 months, a key metric for retail referred to as “same-store sales” will drop during the second and third quarters.
The consumer electronics giant has been up against a sluggish consumer electronics industry as well as more competition from stores online, most notably Internet giant Amazon.com, as well as Walmart the discount behemoth.
Hubert Joly, the CEO, has attempted to turn around company results by revamping merchandise, cutting costs and training employees.
One Wall Street analyst said that the efforts by Best Buy in cost cutting have helped to offset sales that have been weaker and costs that are related to its price matching policy with competitors.
Revenue in same stores dropped by 1.9% during the quarter that ended on May 4 and is expected to remain that way for the next two consecutive quarters, said the company CFO.
The retailer of electronics announced it had net income of $461 million, equal to $1.31 a share. That was a big turnaround from last year during the same period when it suffered an $81 million loss equal to 24 cents a share.
Included in profit for the recently ended quarter was a tax structure adjustment that was one time that helped per share earnings by $1.01.
Adjusted earnings for Best Buy were 33 cents a share, which beat estimates of analysts that projected that figure to be 19 cents a share.
Total revenue dropped 3% to end the quarter at $9.04 billion. For the same reporting period one year ago, that figure was $9.35 billion.
Shares of Best Buy were up by $1.29 or approximately 5% during morning trading. The stock was 36% down for 2014 prior to today’s trading.
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