Best Buy (BBY) reported better-than-expected numbers for its fourth quarter, but CEO Hubert Joly also confirmed that buyout talks with founder Richard Schulze have failed.
Domestic revenue for the fourth quarter declined 0.3 percent year-over-year to $12.55 billion, a dip largely attributed to the closing of 49 stores earlier in 2012. The good news was that the stores that survived the culling saw good growth, with domestic same-store sales rising 0.9%.
The retailer did note, however, that this same-store sales growth was partly due to a calendar shift in “pre-Super Bowl” sales to the fourth quarter — no small consideration for a company that sells so many TVs. And it also noted that store performance suffered outside the US, as international same-store sales fell 6.6 percent.
Earnings per share came in at $1.64, beating consensus estimates by 11 cents. The gross profit rate fell slightly to 22.5 percent, which the company attributes primarily to increased promotional activity on home theaters. That suggests that Best Buy’s new price-matching policy, which was in effect during the holiday season and becomes permanent Sunday, didn’t do much to erode margins.
On a conference call following the earnings release, Joly downplayed the expected margin impact of the new policy.
“The impact has really been minimal, because our prices are quite competitive,” he said, emphasizing that the policy was targeted at improving the company’s “price perception.” He did, however, acknowledge that the new policy was put into place to fight the showrooming trend — which is only an issue if you’re not competing on price.
He added, “We are Best Buy, and we are determined to be the best buy for our customers.”
Founder Couldn’t Find the Funds
For the last several weeks, the big story for the retailer has been Schulze’s attempt to take the company he founded private, and Friday’s earnings report was actually postponed from Thursday to give him one final day to try and close a deal. But hopes for a buyout — and the resulting share spike — had steadily declined since deal rumors initially surfaced, and Thursday afternoon, the Star Tribune reported that talks were dead.
Joly confirmed the conclusion of those talks in Friday’s conference call, saying of the much-speculated-about buyout bid that “no such offer was received.”
Shares were up about 2 percent as of 10 a.m. this morning.
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