BUSINESS

Closing Future Shop No Help: Best Buy Suffers On Canadian Sales Weakness

05/21/2015 11:42 EDT | Updated 05/21/2016 05:59 EDT
Spencer Platt via Getty Images
NEW YORK, NY - AUGUST 20: A Best Buy store is viewed on August 20, 2013 in New York City. Best Buy, the electronics and entertainment retailer, eported its second-quarter profit to jump to $266 million, up from $12 million last year. After a period of struggling, Best Buy instituted cost cutting measures while remaking stores to better compete with discounters and online retailers. (Photo by Spencer Platt/Getty Images)
TORONTO - Best Buy Co. says persistent slower sales of electronics in Canada — and a decision to close the Future Shop chain — left a significant dent in its first-quarter results.

The Minneapolis, Mn.- based retailer reported international revenue dropped 22.1 per cent in the period to US$668 million, dragged lower by the consolidation of its Canadian brands and "ongoing softness" in the local market which led to more sales.

The company also said currency fluctuations played a role in the weakness during the quarter, and projected that changes to the brand in Canada will have an even bigger impact during the second quarter, which ends in early August.

Best Buy expects international revenue will drop 30 to 35 per cent on "overall disruption" from store closures and currency exchange rates.

In March, Best Buy Canada announced the closure of 66 Future Shop locations, with the remaining 65 stores to be re-branded as Best Buy. The company said along with the Future Shop consolidation,it would invest up to $200 million on improvements that include increasing staffing levels.

Overall, the electronics retailer reported a first-quarter profit of US$129 million, or 36 cents per share, down from $461 million or $1.31 per share a year ago.

The results topped Wall Street expectations of 29 cents per share, according to a survey of 15 analysts by Zacks Investment Research.

Best Buy shares have fallen 13 per cent since the beginning of the year, while the Standard & Poor's 500 index has risen slightly more than three per cent. The stock has increased 37 per cent in the last 12 months.

— with files from The Associated Press

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