Best Buy Co. Inc. surpassed Wall Street expectations with rising profits and declining revenues for the first quarter of fiscal 2017, and also announced that a key executive will leave.
The retailer said declining cost of sales, selling, general and administrative (SG&A) expenses and restructuring charges helped its net earnings shoot up 77% to $229 million from $129 million a year earlier.
Meanwhile, foreign currency fluctuation and domestic store closures drove a 1% reduction in enterprise revenue to $8.44 billion from $8.56 billion. Both results exceeded analyst predictions.
Domestic same-store sales were flat. However, comparable online domestic revenue jumped 24% to $832 million, driven by higher conversion rates and increased traffic.
Looking ahead, Best Buy identified three priorities for fiscal 2017: building on its industry position and multichannel capabilities to drive the existing business; driving cost reductions and efficiencies; and advancing key initiatives to drive future growth and differentiation.
During the second quarter of fiscal 2017, Best Buy expects enterprise revenue in the range of $8.35 billion to $8.45 billion and both enterprise and domestic same-store sales of approximately flat. The retailer also reaffirmed previous guidance of approximately flat full-year revenue.
“Our teams delivered a strong first quarter, with better-than-expected revenue, improved profitability and progress against our fiscal 2017 initiatives,” said Best Buy chairman and CEO Hubert Joly. “Although we are reporting better-than-expected results today, we are not raising our full year outlook as the first quarter represents less than 15% of full year earnings and at this stage we have no new material information as it relates to product launches throughout the year.”
In the matter of CFO succession, McCollam will remain with the company in an advisory capacity until the end of the fiscal year, Jan. 28, 2017, to ensure a seamless transition. Corie Barry, a 16-year veteran of Best Buy and its current chief strategic growth officer, will become the company’s CFO on June 14.
“On behalf of my colleagues on the executive team and the people around Best Buy whose professional lives she’s touched, I want to thank Sharon for all that she’s done for Best Buy,” said Joly. “Sharon came out of retirement in 2012 to help revitalize the company when it was facing a multifaceted crisis. Three and a half years later, we are in a completely different place and are into the next phase of our journey as a company. Sharon can leave with a sense of confidence in the future of the company and certain that her legacy will endure.”
Succeeding Barry as the chief strategic growth officer is Asheesh Saksena, most recently the executive VP of strategy and new business development for Cox Communications. He joins Best Buy next month, reporting to Joly and serving on the executive team.