The Low Post News

Cuts in Costs Give Best Buy a Boost

Best Buy Co reported a quarterly profit that was better than expected on Thursday due to lower expenses. The company said it was ahead in its plans of cutting costs, which helped to send shares of the company up more than 6% in trading before the bell on Thursday.

The fourth quarter profit, during one of the most discounted and heavily promoted holiday shopping seasons since the financial crisis, boosted shares of Best Buy to $27.34 on the NYSE.

Net earnings for its continuing operations reached $310 million equivalent to 88 cents per share during the fourth quarter, which ended on February 1. That was compared to a loss of more than $461 million equivalent to $1.36 per share, during the same period one year ago. Excluding all special items, earnings reached $1.24 per share.

Analysts had predicted that profit at the electronics retailer would be $1.02 per share.

Sales dropped by 3% to end the quarter at $14.47 billion, which missed the estimate of Wall Street analysts that was $14.67 billion.

Last month, Best Buy warned that it would have a decline that was bigger than it expected in operating margins for the quarter after an intense round of discounting by its biggest rivals forced the company to also increase its discounts more than usual during the holiday shopping season.

Under Hubert Joly the CEO, who took over the company reins during the fall of 2012, the giant electronics retailer had rid itself of levels of management, cuts hundred of different jobs, closed stores that were unprofitable and increased its cash from selling its ownership stake in a joint venture in Europe with Carphone Warehouse.

Joly to date has eliminated over $765 million in costs annually, said the company on Thursday, which has exceeded the original reduction of costs goal that was only $725 million.

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