Best Buy CEO Sees Turnaround Within His Control
Even though Best Buy is one of the last big-box consumer electronics retailers still standing, grabbing consumer dollars still takes a lot of work.
This year will be a transition year as the electronics retailer begins to execute its "renew blue" initiatives. While its first-quarter results are not entirely positive, as the nearly 5 percent decline in its stock price suggests, there are early positive signs that the moves are beginning to resonate with consumers.
Online comparable sales in the U.S. are up 16.3 percent for the quarter, though U.S. same-store sales fell 1.1 percent, and total same-store stores are down 1.3 percent. The consumer electronics retailer gives no guidance, but CEO Hubert Joly remains focused on turning around the downward trend.
"Every gene in me is focused on positive comps, and that's true for the entire team," Joly said in a phone interview with CNBC. "We know initiatives will take time to materialize, but every month, every quarter, we after [positive comps.]"
(Read More: Best Buy Misses Sales Forecast)
"The numbers may be difficult to digest because of the many moving pieces, remember we call this our transition year," Joly said.
Despite the slide in Best Buy's stock Tuesday, the movement in its shares in recent weeks has been bullish, with the stock up 115 percent so far this year.
As the retailer works to reinvigorate its consumers, it introduced a "Net Promoter Score" to track consumer satisfaction across channels for buyers and non-buyers. The company says the measure has shown a 300-basis-point improvement over the past five months.
Best Buy's first quarter also saw the beginning of the its Samsung Experience shops in hundreds of locations. While the company won't comment on the sales trends specifically, "the customer response encouraging," Joly said.
"These vendors, Samsung and others, spend billions of dollars developing new products. Just seeing pictures or mock-ups, but without demonstration and explanation, you are missing the point. Vendors are excited about using our platforms in store and online, it's an enhanced experience [compared] to competitors," he said.
When asked if other vendors have expressed interest in opening shops similar to the Samsung Experience, Joly said, "You'll have to wait and see."
For its first-quarter financial results, Best Buy excluded the impact of European operations in its reported earnings and revenue because it is selling its 50-percent stake in Best Buy Europe, which makes the comparisons to Wall Street analysts' consensus tricky.
(Read More: Best Buy Exits Europe Venture)
However, if you exclude restructuring charges and include results from Europe, Best Buy earned 36 cents a share, compared with the average analyst forecast of 25 cents a share, reported by Thomson Reuters.
Similarly, Best Buy reported revenue of $9.38 billion, stripping out Europe. But the company tells CNBC, that including Europe, revenues were $10.8 billion, which compares with a $10.6 billion consensus estimate from Wall Street.
Gross margin narrowed to 23.1 percent from 24.9 percent for the quarter. Joly said, the quarter's "gross profit margin erosion is the result of the increased investment in price…the price-matching program is only a marginal impact…it's more because we have made a deliberate investment in price competitiveness."
The one thing that may work in its favor is that Joly has a positive outlook on the state of the U.S. consumer in the near term.
"The U.S. market continues to be relatively good, we don't have a market problem, the things we need to improve are within our control," he said.
-By CNBC's Courtney Reagan. Follow her on Twitter @CourtReagan
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