Best Buy Co. Earnings Cheat Sheet: Higher Expenses Shrinks Margins, Profit Declines

S&P 500 (NYSE:SPY) component Best Buy Co. (NYSE:BBY) reported its results for the first quarter. Best Buy Co., Inc. is a retailer that sells appliances, consumer electronics, home office products and software.

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Best Buy Earnings Cheat Sheet for the First Quarter

Results: Net income for the electronics store fell to $136 million (35 cents/share) vs. $155 million (36 cents/share) a year earlier. A decline of 12.3% from the year earlier quarter.

Revenue: Rose 1% to $10.9 billion YoY.

Actual vs. Wall St. Expectations: BBY beat the mean analyst estimate of 33 cents/share. Estimates ranged from 26 cents per share to 37 cents per share. Analysts were expecting revenue of $10.69 billion.

Quoting Management: “I’d like to thank our employees around the world for their continued efforts to serve our customers and focus on profitable returns for our shareholders,” said Brian J. Dunn, CEO of Best Buy. “We’re pleased that our actions improved sales trends within the quarter, with continued double-digit growth online and strong growth of mobile phones and connections. We also made progress on our goal of enhancing returns by continuing strong share repurchasing activity.”

Key Stats:

Gross margin shrunk 0.9 percentage point to 25%. The contraction appeared to be driven by rising costs as the figure rose 2.2% from the year earlier quarter while revenue rose 1%.

The company has now seen net income fall in each of the last three quarters. In fourth quarter of the last fiscal year, net income fell 16.4% from the year earlier while the figure fell 4.4% in the third quarter of the last fiscal year.

A year-over-year revenue increase last quarter snaps a streak of two consecutive quarters of revenue declines. Revenue fell 1.8% in the fourth quarter of the last fiscal year and fell 1.1% in the third quarter of the last fiscal year.

The company has now beaten estimates the last two quarters. In fourth quarter of the last fiscal year, it topped expectations with net income of $1.98 versus a mean estimate of net income of $1.85 per share.

Competitors to Watch: CONN’S, Inc. (NASDAQ:CONN), RadioShack Corporation (NYSE:RSH), hhgregg, Inc. (NYSE:HGG), GameStop Corp. (NYSE:GME), Apple Inc. (NASDAQ:AAPL), Sears Holdings (NASDAQ:SHLD), Systemax (NYSE:SYX), Wal-Mart (NYSE:WMT), Target (NYSE:TGT), Costco (NASDAQ:COST), Amazon.com (NASDAQ:AMZN), eBay (NASDAQ:EBAY), Overstock.com (NASDAQ:OSTK) and Funtalk China Hldgs. Ltd. (NASDAQ:FTLK).

Stock Performance: Shares of BBY are up over 7% to $30.99 per share this morning.

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(Source: Xignite Financials)