Fourth quarter same store sales inched up 0.9% at Best Buy and profits were better than expected as the company fared better during the holiday season than many thought.
Fourth quarter revenue increased slightly to $16.7 billion for the 13 week period ended February 2, and the company reported adjusted earnings per share of $1.64 compared to $2.18 the prior year. The company also said adjusted free cash flow totaled $965 million thanks to aggressive inventory reductions.
"These results were driven by a compelling assortment of new products in key growth categories, increased ‘blue-shirt’ training and higher customer engagement in our retail stores, and impactful ‘traffic-generating’ marketing activities," said Best Buy president and CEO Hubert Joly. "It was a quarter that was driven, not given and we are encouraged by the intensity, collaboration and momentum that was generated by both our front line and corporate teams as we began to execute against our Renew Blue initiatives."
While the meager comp increase was better than expected heading into the holiday season, it comes against a weak prior year comparison when comps declined 1.1%. Accordingly, Joly noted that the company is intently focused on stabilizing and improving comps and increasing profitability across its global businesses during the current year.
"We recognize, however, that fiscal 2014 is a year of transition and that further investment will be required to advance our Renew Blue transformation," Joly said.
Renew Blue is the name the company gave to six strategic priorities that include: accelerating online growth; escalating the multi-channel customer experience; increasing revenue and gross profit per square foot through enhanced store space optimization and merchandising; driving down cost of goods sold through supply chain efficiencies; continuing to gradually optimize the U.S. real estate portfolio; and further reducing expenses.
The company didn’t provide first quarter or full year financial guidance, but did say directionally it expects there to be significant pressure during the first quarter. CFO Sharon McCollam said despite the financial pressures Best Buy is experiencing inspiring energy around its Renew Blue strategy.
"Our fourth quarter results and the actions that we have taken since then to begin rationalizing our infrastructure, have given the organization something that they have not had in a long time – pride in the outcome and belief in what is possible," McCollam said.