Sat, Nov 22, 2014 - Page 15 News List

Best Buy profit almost doubles in third quarter

NY Times News Service, NEW YORK

Cost-cutting and an improved Web strategy helped Best Buy almost double its profits in the third quarter, the retailer said on Thursday.

An earnings report signaled to analysts that the company was on solid footing heading into the holiday shopping season.

“Retailers, a year or two ago, were sort of ‘Oh my gosh, we’ve got to compete with online,’ and maybe the business grew a little, but it wasn’t a cohesive omni-channel strategy,” Stifel Nicolaus analyst David Schick said, using the term for shopping through all available avenues like the Internet and at physical stores.

However, he said that the retailers that have put in the work “are seeing some benefits in late 2014.”

Best Buy increased its online sales 22 percent in the third quarter, compared with an increase of 15 percent in the same period last year.

It is also focusing on how it delivers gifts to customers, after bad winter weather and a large volume of packages helped cause delivery delays last year.

Like other major retailers, Best Buy is trying to ship more items from its stores, rather than just a handful of warehouses around the country, in an effort to get packages to shoppers quickly.

On Thursday, Best Buy said it had expanded its ship-from-store option to 1,400 stores, up from 400 last year. Another online service, in-store pickup, has improved as well. It helps drive foot traffic, something all retailers have been struggling with as more customers choose to shop online.

“The trip to the stores needs to be extraordinary from a customer-experience standpoint,” Best Buy president and chief executive Hubert Joly said during a call with analysts on Thursday to discuss the third-quarter results.

“Like every holiday, though, we believe the outcome of these initiatives is, and will continue to be, tempered by other external and internal factors — including the investments that are required to drive them,” he said in an earlier statement giving Thursday’s results.

In the period that ended Nov. 1, Best Buy reported its earnings per share rose 78 percent to US$0.32. Profits rose to US$107 million, up from US$54 million last year. Revenue increased to US$9.38 billion compared with US$9.33 billion a year earlier.

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