May 22 - Best Buy swung to a profit but sees sales declining over the next two quarters as consumers wait for new products. Fred Katayama reports.
Best Buy swung to a profit in the latest quarter, but the world's largest consumer electronics retailer didn't have much to crow about. Its sales fell yet again, dragged down by weak demand for tablets, home theater and services. And they won't get better soon. Consumers are putting off buying mobile phones and waiting for new ones like the iPhone 6 and other product launches. And they're not buying many TVs and other consumer electronics products. So Best Buy predicts its comparable store sales will decline further over the next two quarters. Among the few bright spots: it grew market share in the U.S. and profitability improved. But despite CEO Hubert Joly's drive to slash costs and add stores-within-stores by partnering with the likes of Samsung and Sony, investors have been selling its stock. The stock, a huge winner last year, is down 36 percent this year. RBC analyst Scot Ciccarelli said, "Investors aren't likely to give Best Buy the benefit of the doubt the way they did last year, but we continue to believe that if they can stabilize, start to improve gross profit dollars, then they can drive earnings before interest and taxes growth through cost cuts."