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The entrance to the Best Buy store is seen in New York, March 26, 2012.© Shannon Stapleton / Reuters

Best Buy Co. Inc. on Friday showed a bit of a turnaround in its U.S. stores, with flat same-store sales during the key holiday season, but slashed its expectations for free cash flow after it had to pay for some inventory earlier than expected.

Best Buy's total revenue slipped 0.4 per cent to $12.8-billion in the nine weeks ended Jan. 5, while sales at stores open at least 14 months declined 1.4 per cent, versus a 0.4 per cent decline in the 2011 holiday period.

Same-store sales were flat in the United States and fell 6.4 per cent internationally on declines in Canada and China.

The flat U.S. same-store sales performance in the interim report was much better than decline of 2.5 per cent expected by Janney analyst David Strasser, but he said that the international decline was steeper than the 4.5 per cent decline he had anticipated.

Best Buy is expected to report full fourth-quarter results on Feb. 28.

"The company likely gained market share," Mr. Strasser said in a note to clients. "These results should put a long awaited floor on the stock and give potential buyers incremental confidence in the structural strengths."

The sales also improved from the quarter that ended in early November. Best Buy's third-quarter same-store sales fell 4.3 per cent, including a 4 per cent decline in the United States.

The company now expects free cash flow of about $500-million for the year ending on Feb. 2, down from a November forecast that called for a range of $850-million to $1.05-billion.

While comparable-store sales, gross margin, earnings and inventory levels were in line with the company's expectations, Best Buy now expects fiscal 2013 accounts payable as a percentage of inventories to be lower than those of the previous year. It previously said they would be consistent with those of the prior year.

Best Buy said it had received inventory earlier than expected and therefore had to make payments earlier. Thanksgiving fell on Nov. 22 in 2012, two days earlier than in 2011.

It also saw a shift in sales mix to products that sell more quickly and carry shorter payment terms, such as mobile phones, tablets and e-readers.

The company said that its overall vendor payment terms were consistent with the prior year.

Best Buy suspended profit forecasts and share buybacks for the rest of the year last August to give its newly named Chief Executive Hubert Joly time to construct his own turnaround plan.

In its fourth holiday season after the bankruptcy of arch-rival Circuit City, Best Buy faced cutthroat competition from the likes of Wal-Mart Stores Inc and Amazon.com Inc .

In an attempt to tackle those rivals that often compete on price, Best Buy promised to match competitors' online prices for some items during the 2012 holiday shopping season. It also gave additional training to workers at its stores.

Best Buy said same-store sales had risen in the mobile phone, tablet/e-reader and appliance categories, but declined in entertainment, televisions and computing.

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