Best Buy, the giant US consumer electronics group who are set to open up their web site to Australian consumers, has posted a 4.4 percent drop in profits to $217 million, down from the $227 million figure at the same time last year.
As domestic same-store sales dropped 5 percent, due to declining sales of TVs and entertainment hardware and software, International revenue grew 3 percent to $3.2 billion for the same period. The revenue gain was driven primarily by the impact of new stores in the past 12 months and a 2.3 percent increase in comp-store sales.
ChannelNews has been told that Best Buy will open up their online site with an Australian URL in 2011. This could result in Australians having access to goods at up to 40 percent less than what Harvey Norman, Officeworks and Dick Smith currently charge for the same goods.
“While sales were lower than we expected during the quarter, I’m pleased with our strong store execution, solid gross margin expansion and efforts to control costs,” CEO Brian Dunn said.
Best Buy said that domestic US revenue declined more than expected, driven primarily by larger-than-expected industry declines in key U.S. consumer electronics categories for the three months ending Oct. 31, as well as a decline in the company’s estimated domestic market share for such period.
The domestic segment experienced a low-double-digit comp-store sales decline in TVs and entertainment hardware and software. Domestic comp-store sales decline in TVs was driven by a low-double digit decline in unit sales and a mid-single-digit price decline as the industry continued to experience softness during the quarter, Best Buy reported.
The company’s gross profit rate for the fiscal third quarter was 25.1 percent of revenue, an increase of 60 basis points when compared with the third quarter of fiscal 2010. The domestic segment gross profit rate for the fiscal third quarter was 25 percent, compared with 24.1 percent for the prior-year period. The 90 basis point year-over-year increase in the gross profit rate was due primarily to continued growth in Best Buy Mobile and improved promotional effectiveness due to lower costs in financing programs and improved pricing strategies.