Considering how much of the revenue in Hollywood comes from retail sales and consumer electronics, there’s sure to be some teeth gnashing over the earnings figures out this morning from Best Buy for the quarter that ended in November. Shares in the No. 1 electronics chain are down more than 11% in early trading after it reported net profits of $154M, down 29% from the same period last year, on revenues of $12.1B, up 1.8%. Factoring out a one-time restructuring charge and a gain on an investment sale, earnings came in at 47 cents a share — below the 51 cents that analysts expected. Best Buy attributes much of the profit drop to declining purchases of digital cameras and game consoles, as well as promotions — including those on Black Friday — to drive sales of tablet computers, TV sets and movies. Still, entertainment sales including music and DVDs fell 9% at domestic stores open 14 months or more. They now account for 13% of Best Buy’s U.S. revenue. Consumer electronics, which represent 35% of Best Buy’s domestic sales, were down 4.8%. The chain had better luck with computers and mobile phones, which represent 40% of sales and were up 8.8%.
Best Buy’s announcement came as the Commerce Department offered a mixed picture of retail sales in November. Spending increased 0.2% with gains for electronics, appliances, cars, clothing, and department store items but declines for building materials, gas, and groceries. It’s the sixth consecutive month of growth, but it’s less than forecasters expected — and down from the 0.6% spending growth in October.
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