The Channel logo
The Channel uses cookies. Find out more.

News

By | Austin Modine 19th June 2007 20:30

Video games, TV ruin Best Buy's profits

Exercise would make it worse though

Sponsored: Creating the Storage Advantage

Best Buy, the largest US consumer-electronics chain ,reported a net income drop of 18 per cent to $192m (39 cents per share), despite strong sales in the first quarter.

"Our first-quarter results fell short of our expectations." Best Buy CEO Brad Anderson said. "Strong revenue results from lower-margin products significantly cut into our gross profit rates."

Profit was dragged down by products such as notebook computers and gaming hardware carrying lower gross margins. Best Buy reported $234m (47 cents per share) in income a year earlier.

Revenue increased 14 per cent to $7.93bn in the first quarter, which ended June 2. One year ago, Best Buy reported $6.96bn.

Best Buy is also pointing a finger at discounts in home theater equipment such as flat-screen TVs transitioning to updated models for taking a bite out of the profit margin.

Looking ahead, the company said consumer spending will be difficult to predict this year. But Best Buy is confident that sales of flat-panel TVs, gaming and notebook computers will accelerate — which could continue to cut into the company's short-term gross profit rate.

Best Buy forecast fiscal-year earnings of $2.95 to $3.15 per share. The figure is below the Reuters consensus of $3.16. ®

Sponsored: Creating the Storage Advantage

comment icon Read 1 comment on this article alert Send corrections

Opinion

Partnership

Frank Jennings

Confused? No problem, we have 5, no 6, no 7... lots of standards

Chris Mellor

VC sequence could end not with a bang, but a whimper
Sad man stares glumly over boxed contents of desk. Image via shutterstock (Baranq)

Chris Mellor

All that is storage does not beget gold

Features

Funnel of cash. Credit: via SXC – http://www.sxc.hu/profile/Leonardini
You see a diversity tickbox nightmare, I see human beings
hands waving dollar bills in the air
AWS and Salesforce match up to Ellison's hardware