Net income decreased 14.5%. to $153 million, or $0.36 per share. The retailer's first-quarter profit included $0.06 per share in charges related to operating-model changes in the U.S. and corporate restructuring in its European operations.
Revenue increased 12%, to $10.1 billion, but same-store sales tumbled a substantial 6.2%, compared to a 3.7% climb in the year-ago period.
Like many retailers, Best Buy endured lackluster customer traffic in the quarter. Best Buy also said that the comparisons were tough against last year, when shoppers had stimulus checks to spend. Overall, May's same-store sales showed that the storm's not over for retail yet, with companies such as Target
In one small bright spot, it looks like Circuit City's closure did help Best Buy. Right on the heels of its rival's demise, Best Buy said domestic market-share gains accelerated in March and April, expanding nearly 200 basis points for the entire quarter. Of course, Best Buy faces competition from Target and Costco, as well as smaller retailers like RadioShack
With consumers feeling pinched for cash, it's not surprising that spending on discretionary gadgets is less than robust. Necessities from Wal-Mart or quick, cheap fare from McDonald's
Still, Best Buy has a great brand, and it's pursued customer-centric initiatives and other welcome steps to differentiate itself from run-of-the-mill retail rivals (although it does need to avoid channeling Circuit City). The short term may be rough for Best Buy -- watch for falling share prices! -- but it's still a solid stock for investors' watch lists, despite today's pessimism.
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Best Buy, Costco, and Wal-Mart are Motley Fool Inside Value selections. Best Buy and Costco are also Stock Advisor picks, and the Fool owns shares of each. Try any of our Foolish newsletter services free for 30 days.