Electronic retailer Best Buy (BBY) released not-so-impressive results for the second quarter. Although the company failed to impress with good revenue, it managed to post some good improvement in earnings. Management is thinking that the company underperformed on the back of weak consumer demand and aggressive competition from its peers, leading to poor sales. Further, Best Buy is expecting a decline in sales in the coming two quarters as well. However, Best Buy is engaged in many initiatives to get better. The cost-cutting initiatives might prove to be a growth driver for it in the future. Let us see how?
Can it turn around?
In the recently reported quarter, Best Buy posted revenue of $8.9 billion. However, the company’s comparable store sales declined by 2%, while its consumer electronics category declined by 2.5%. But despite these upsetting figures, Best Buy managed to post good earnings. It posted EPS of $0.44 as compared to $0.32 per share last year.
Moreover, its sales declining puts pressure on its profit margins. Statistics tell us that the company has fallen for 13 consecutive quarters. Also, the situation is turning worse for Best Buy with negative customer reactions. However, Best Buy is coming up with various initiatives aimed at improving the profitability. The company has made cost-cutting initiatives its prime priority. Further, it has aggressive investment plans to strengthen its e-commerce platform, which will enhance its services of shipping goods directly from its stores to the destination.
— Guru Focus