Best Buy Gains Market Share; Profits Fall 19%
Insisting that economic downturns are a good time to beef up market share, Best Buy Co. says its second-quarter earnings fell 19% to $202 million, even as its revenue and same-store sales gained.
The company--which says the lower profits came as a result of its continued enhancement of U.S. stores, including its Best Buy Mobile cell phone units--says that it boosted its domestic market share by 1.6 percentage points, compared with the prior year's period.
"In a challenging environment that finds many of our competitors retrenching," company executives say in its release, "we are growing and opening more new stores. We believe it's prudent for strong companies to distance themselves from their competitors during tough times."
Comparable store-sales increased 4.2% for the quarter; in the U.S., comparable-store sales advanced 5.3%. The company added that its "strategic indicators remain strong," and that it expects a comparable-store sales gain in the range of 2% to 3%, with revenues reaching $44 billion, for fiscal 2009.
Appliance sales for the Minneapolis-based chain continued to languish--falling 9.8% this quarter, on top of a 7.4% decline in the same quarter a year ago. But same-store sales in all other categories--including consumer electronics, which had been a weak spot--gained. (Increases in flat-panel TVs and GPS sales fueled that growth, more than offsetting declines in projection and tube TVs, as well as MP3 players.)
The home office category--the retailer's second-largest segment--was the strongest performer, achieving a comparable-store sales gain of 15.1%. While sales of landline phones and printers fell, the chain says it managed double-digit sales in notebook computers, as well as triple-digit increase in mobile phones and accessories.
Entertainment software came in flat, as declining sales of CDs and DVDs ate up the double-digit gains in video gaming.
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