Best Buy Co Inc BBY
Q3 2013 Earnings Call Transcript

Transcript Call Date 11/20/2012

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Best Buy's Conference Call for the Third Quarter of Fiscal 2013. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this call is being recorded for playback and will be available by 12.00 pm Eastern Time today.

I would now like to turn the conference call over to Bill Seymour, Vice President of Investor Relations. Please go ahead.

Bill Seymour - VP, IR: Good morning, and thank you for joining us on our fiscal third quarter 2013 conference call. We have two speakers today; Hubert Joly, our President and CEO; and Jim Muehlbauer, our CFO who is continuing in his role until December 10th when Sharon McCollam will join Best Buy. After our prepared remarks we’ll be happy to take Q&A.

A few items before we get started. As usual the media are participating in this call in a listen-only mode. Let me remind you that comments made by me or by others representing Best Buy may contain forward-looking statements, which are subject to risks and uncertainties. Our SEC filings contain additional information about factors that could cause actual results to differ from management's expectations.

Please note that our reported results this morning include non-GAAP financial measures. These results should not be confused with the GAAP number we reported this morning in our earnings release or with the GAAP numbers we will report in our 10-Q. For GAAP to non-GAAP reconciliations of our reported to adjusted results and guidance, please refer to the supplemental schedules in this morning's news release

And one other housekeeping item, we plan to announce holiday revenue results for the nine weeks ending January 5, 2013 for fiscal November and December on January 11, 2013.

Now I would like to turn the call over to Hubert.

Hubert Joly - CEO: Thank you, Bill, and good morning, everyone, and thanks to all of you for joining the call and to those who attended our Analyst Day last week. And for those of you that were not able to attend, please note that the webcast is available on our website.

On that day we shared a candid assessment of Best Buy. We highlighted Best Buy’s strength and underscored that its performance has been unsatisfactory in a number of areas over the last three years. We also unveiled Renew Blue, a set of priorities to begin reinvigorating the Company’s performance and rejuvenating Best Buy.

Today we are reporting our third quarter financial results. In line with trends experienced over the last three years, Best Buy financial performance during the quarter was clearly unsatisfactory. The results we are reporting today only strengthens our sense of urgency and purpose.

Now there were some positive developments during the quarter. We did well in a number of product categories, including mobile phones, appliances and tablets and eReaders. We had positive comps in these categories. We also grew market share year-over-year in these product categories as well as in notebooks. In addition, our online channel continued to grow at over 10% year-over-year. However, our overall performance was not satisfactory. Now some of it can be attributed to the effect of product transitions, especially related to the Windows 8 launch and the launch of several new smartphones and tablets. These product transitions have had a negative impact on sales and margins in the quarter as customers delayed their purchases in anticipation of new products to be introduced. At the same time, we also had a number of items that impacted our bottom line, including investments in front line training and compensation as well as executive transition expenses. So we do not believe that the rate of decline that Best Buy experienced in the third quarter can be extrapolated in any way.

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