Best Buy execs expressed their dissatisfaction with the company's fourth quarter and forecast continued tough times, but despite these negative comments the consumer electronics chain posted a profit.
Best Buy CEO Hubert Joly had a long list of reasons why the fourth quarter, which ,ended Feb. 1, proved difficult and noted that the situation was saved primarily through cost savings measures that were implemented. In addition, the outlook for the coming months was not that bright with the company indicating that the weak fourth quarter numbers were indicative of how the first half of 2014 will likely play out.
" From a revenue perspective, in light of overall economic concerns, we are assuming that the industry declines in the consumer electronics category that we saw in the fourth quarter will continue. As a result, it is reasonable to expect that total company revenue and comparable store sales will remain slightly negative - similar to Q4 FY14 - in the first half of the year," the company wrote in its financial release.
Joly pinned the company's lower fourth quarter revenue total of $14.5 billion on less store traffic, promotional pricing, the weather and a shorter holiday shopping. On the flip side he credited cost savings initiatives along with several new retail programs instituted last year for helping Best Buy post a profit of $293 million for the quarter, up from a $409 million loss during the previous fourth quarter.
These changes included making progress with the company's Renew Blue program that he initiated in Nov. 2012 that has led to cost reductions totaling $765 million.
"We have enhanced how we serve our customers and have been building key foundational capabilities. Most notably, we have: increased domestic online sales by 20%; significantly increased our price competitiveness; rolled out ship-from-store to more than 1,400 locations; opened 1,400 Samsung and 600 Windows stores-within-a-store and completed the first phase of our floor space optimization," Joly said.
These improvements were also reflected in Best Buy's year end numbers. The retailer posted a net income of $532 million on sales of $42.4 billion for the year.
The company did not comment upon the rumored layoffs reported recently. An insider told the New York Post that up to 2,000 managers could be pink slipped, but no store closings were expected.