Consumer electronic retailer Best Buy (BBY) - Get Report reported Wednesday that its third-quarter 2009 earnings fell 77.2%, hit by a 5.3% decline in comparable-store sales and the impact of an unfavorable exchange rate.
Net income dropped to $52 million or 13 cents per share from $228 million or 53 cents per share in third-quarter 2008. Excluding the impairment charge of 22 cents per share, related to a decline in market value of its 2.9% stake in Carphone Warehouse Group PLC, its adjusted EPS were 35 cents, beating the consensus estimate of 24 cents per share.
BBY's revenue grew 15.8% year over year, to $11.50 billion from $9.93 billion, reflecting the inclusion of Best Buy Europe's revenue, reported on a 60-day lag, and gains from the net addition of 181 new stores within the last year.
Segment-wise, revenue from Domestic declined marginally to $8.20 billion from $8.21 billion, driven by the net addition of 137 new stores. That, however, was offset by a 6.3% decrease in comparable-store sales. International revenue skyrocketed 91.9%, to $3.30 billion, led by the net addition of 44 new stores in the past 12 months.
During the third quarter, the company opened 37 U.S. Best Buy stores. It also opened seven Pacific Sales showrooms and 18 Best Buy Mobile stand-alone stores. Meanwhile, it paid a dividend of 14 cents per share, aggregating to $58.00 million.
Best Buy is planning to reduce its capital spending by approximately 50% next year, including reduction in the new-store openings in the U.S., Canada and China. The company also plans to cut corporate staff and has offered voluntary exit packages to its 4,000 corporate employees. Depending on the response, the company said it may resort to involuntary layoffs.
Looking forward to 2009, the company maintains its annual EPS guidance range between $2.30 and $2.90, excluding the investment impairment and any restructuring charges. BBY anticipates a decline in annual comparable-store sales ranging between 1% and 5%.