Best Buy Co. Earnings: Margins Shrink as Costs Rise, Profit Falls

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

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Best Buy Earnings Cheat Sheet for the Second Quarter

Results: Net income for the electronics store fell to $177 million (47 cents per share) vs. $254 million (60 cents per share) a year earlier. This is a decline of 30.3% from the year earlier quarter.

Revenue: Remained constant at $11.35 billion.

Actual vs. Wall St. Expectations: BBY fell short of the mean analyst estimate of 53 cents per share. Analysts were expecting revenue of $11.52 billion.

Quoting Management: “I’d like to thank our employees around the world for continuing to provide a great experience for our customers,” said Brian J. Dunn, CEO of Best Buy. “While results in the second quarter and our outlook reflect continued macro challenges to overall consumer spending and lower consumer electronics industry sales, we have made good progress on our key strategic focus areas in this environment. Looking forward to the important holiday season, I believe Best Buy is well positioned to bring the benefits of our multi-channel model to our customers and shareholders.”

Key Stats:

The company has now seen net income fall in each of the last four quarters. In the first quarter, net income fell 12.3% while the figure fell 16.4% in the fourth quarter of the last fiscal year and 4.4% in the third quarter of the last fiscal year.

Gross margin shrank 0.4 percentage point to 25.3%. The contraction appeared to be driven by increased costs, which rose 0.6% from the year earlier quarter while revenue rose 0.1%.

The company fell short of forecasts after beating estimates in the previous two quarters. In the first quarter, it topped the mark by 2 cents, and in the fourth quarter of the last fiscal year, it was ahead by 13 cents.

Over the last five quarters, revenue has increased 0.3% on average year over year. The biggest increase came in the second quarter of the last fiscal year, when revenue rose 2.9% from the year earlier quarter.

Competitors to Watch: CONN’S, Inc. (NASDAQ:CONN), RadioShack Corporation (NYSE:RSH), hhgregg, Inc. (NYSE:HGG), GameStop Corp. (NYSE:GME), Apple Inc. (NASDAQ:AAPL), Circuit City Stores Inc (CCTYQ), The Carphone Warehouse Group PLC (CPW), Funtalk China Hldgs. Ltd. (NASDAQ:FTLK), Kesa Electricals plc (KESA), and Globex Utilidades SA (GBXPY).

Investing Insights: Steve Jobs Prepares to Deliver a New Catalyst for Apple’s Stock.

(Source: Xignite Financials)

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