Best Buy beats forecasts as it fights to stay afloat

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associated press Best Buy Co.'s first-quarter profit fell 26 percent on restructuring charges, though its revenue and adjusted earnings beat Wall?Street's expectations. The struggling electronics retailer is trying to survive a changing marketplace. An employee looks over a customer's cellphone contract at a Best Buy in Mountain View, Calif.

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NEW YORK » Best Buy Co. said Tuesday that its fiscal first-quarter profit dropped 26 percent on restructuring charges as the struggling electronics retailer began implementing a turnaround plan.

Its adjusted earnings and revenue both topped Wall Street’s expectations. That’s sorely needed good news for the electronics chain as it attempts to update its increasingly outmoded "big-box" store model. At the same time, the company is seeking a new CEO after the former top executive left amid scandal. Still, the results show the chain has a long way to go to improve results in a sustainable way.

Best Buy said U.S. sales growth in tablets, mobile phones, e-readers and appliances helped offset declines in notebooks, gaming, digital imaging and TVs during the quarter. But revenue in stores open at least 14 months, which excludes the impact of stores that open and close during that period, fell 5.3 percent during the quarter. They were dragged down by weakness in Europe and China.

Best Buy has been shrinking store size and focusing on its more profitable products such as mobile phones. It’s also trying to combat the so-called "showrooming" of its stores — when people browse at Best Buy but purchase electronics goods elsewhere. In April it announced a major restructuring that includes closing 50 stores (none in Hawaii), cutting 400 corporate jobs and trimming $800 million in costs.

In a call with investors, interim CEO Mike Mikan said those are just the "first phase" of major changes the chain needs to make in order to survive in a changing retail landscape.

"Today’s marketplace is different," he said. "From my perspective it is a marketplace we weren’t prepared for. Best Buy’s customer experience is no longer unique as it once was."

The Minneapolis-based company reported net income fell to $158 million, or 46 cents per share, in the three months ended May 5. That’s down from $212 million, or 53 cents per share, a year ago.

Excluding restructuring charges, earnings were 72 cents per share. Analysts expected 59 cents per share, according to FactSet.

Revenue rose 2 percent to $11.61 billion, aided by an extra week. Domestic revenue rose 5 percent to $8.82 billion, but international revenue fell 6 percent to $2.79 billion on weakness in China and Europe. Wall Street expected $11.5 billion.