Best Buy, Circuit City Both See Earnings Drop
Both Best Buy and Circuit City stated their first-quarter earnings this week, and while Best Buy has largely avoided the bad publicity of layoffs and store closings that have plagued Circuit City of late, the Minnesota-based retail giant joined its rival in posting a lackluster first quarter.
Best Buy’s earnings fell 18 percent in the first quarter from the same period a year ago. Despite a gain in revenues, the earnings declined due to a large reliance on low-margin products, as well as weak profits in the company’s Chinese operation. The company reported net earnings of $192 million, down from $234 million the same period last year. They attributed the revenue use to 230 new stores over last year’s total.
Circuit City, meanwhile, lost 54.6 million dollars, down from a modest profit of $6.4 million the year before, based a 4.3 percent decline in net sales, its first such drop in three years. They too largely attributed their loss to stagnation in the flat-panel TV market.