Best Buy Co. on Tuesday reported a loss in its fiscal first quarter as it sold its stake in Best Buy Europe and works on a turnaround plan that includes cutting costs and closing some stores.
Its adjusted earnings beat Wall Street expectations, but revenue fell short as the company faced tough pricing competition during the quarter. Its shares fell in premarket trading.
The company has been working on a turnaround plan as it faces increased competition from online retailers and discount stores. The plan includes closing stores, cutting costs and investing in training for its employees. In April it also said it would sell its 50 percent stake in its European joint venture to streamline its business and strengthen its balance sheet.
The electronics retailer says net loss for the three months ended May 4 after paying preferred dividends totaled $81 million, or 24 cents per share. That compares with net income of $158 million, or 46 cents per share, last year.
Excluding restructuring costs and costs related to selling its stake in Best Buy Europe, it earned 36 cents per share. That beat the 24 cents per share that analysts expected, according to FactSet.
Revenue fell nearly 10 percent to $9.38 billion, short of expectations of $10.67 billion. Revenue in stores open at least one year fell 1.1 percent. The measure is a key gauge of a retailer's expectations because it excludes stores that open or close during the year.
CEO Hubert Joly said results were hurt by the shift of Super Bowl, which typically drives TV sales, into the prior quarter, and the decision to reduce sales in some non-core businesses.
CFO Sharon McCollam said the company expects the price competitiveness that hurt per share results in the first quarter will continue into the second. She added that adding Samsung store-within-stores and restructuring retail floor space at some stores are expected to hurt some stores as well.
The investments in its turnaround plan, however are expected to be "substantially offset" by the company's cost cutting initiatives.
Best Buy shares fell 48 cents, or 1.8 percent, to $26.33 in premarket trading about 75 minutes ahead of the market opening.