MINNEAPOLIS-In a quarter that, according to President and CEO Hubert Joly, reflected continued progress in its turnaround effort, Best Buy posted net income of $461 million, compared to a net loss of $81 million in the first quarter of last year.
Reduced expenses as a result of the retailer’s Renew Blue initiative offset a decline in sales during the quarter. Selling, general and administrative expenses fell 8.3 percent in dollars and 110 basis points as a percentage of sales, to 20.1 percent. The bottom line also benefited from the absence of a loss in last year’s first quarter of $170 million from discontinued operations.
Net sales were down 3.3 percent to $9 billion in the quarter, which ended on May 3. This included a same-store sales decline of 1.9 percent. Gross margin fell 70 basis points to 22.4 percent.
Joly said the sales decrease was expected and attributed it to the lagging consumer electronics industry. “Nevertheless,” he added, “we achieved market-share gains in the U.S. fueled by our improved price competitiveness and an enhanced customer experience focused on advice, service and convenience.”
Joly also said Best Buy made progress in other initiatives, including leveraging the retailer’s new ship-from-store and digital marketing capabilities, which produced a 29 percent gain in domestic comparable online sales; new home-theater stores-within-a-store vendor partnerships with Samsung and Sony; new mobile installment billing programs; and increasing its annualized Renew Blue cost reductions by $95 million.