MINNEAPOLIS – Best Buy Tuesday announced plans to reduce operating costs by $400 million over the next three years.
CEO Hubert Joly called the initiative “Phase Two” of the retailer’s “Renew Blue” campaign that has cut costs by more than $1 billion since he took over the then-struggling company in the middle of 2012.
Joly told analysts in a morning conference call that the cost cuts would be gradual and structural in nature and would not involve employee layoffs.
The news came after Best Buy reported that its fourth-quarter profit rose 77 percent, lifted by strong holiday sales of large-screen TVs and smartphones.
The electronics retailer also saw its comparable sales rise for the second consecutive quarter, a feat it hasn’t accomplished for nearly five years.
Best Buy said Tuesday it earned $519 million, or $1.48 a share. Analysts expected $1.36 a share.
A year ago, Best Buy earned $293 million, or 85 cents a share, for the three months ended Feb. 1. Adjusted for one-time costs and benefits, per-share earnings rose 23 percent.
Revenue was $14.2 billion, up 1.3 percent.
The results exclude the performance of its Five Star store chain in China, the sale of which closed on Feb. 13.
The company also said it would pay a one-time dividend to shareholders of 51 cents a share, chiefly from proceeds of a lawsuit related to flat-panel TV pricing, lift its regular dividend and resume a share repurchase program that was suspended in 2012.
Best Buy shares rose 1.6 percent in early trading.
Hubert Joly, the company’s chief executive, said Best Buy “capitalized on the product cycles in large screen televisions and mobile phones” to deliver better-than-expected results.
“These two categories were the primary drivers of our year-over-year revenue growth, and more than offset weakness in the tablet category, which was impacted by material industry declines,” Joly said in a statement.
Best Buy executives continue to be cautious about improvements 2015, citing limited visibility on new product launches and the normal deflationary price pressure on electronics goods.
Sharon McCollam, the company’s chief financial officer, reiterated a previous forecast for a small drop in adjusted operating income during the first two quarters of the new year.
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