Best Buy raises fourth-quarter earnings estimates

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Posted 1:46PM on Wednesday, January 9, 2002

EDEN PRAIRIE, Minn. - Best Buy Inc. raised its fourth-quarter profit estimate Wednesday, as it reported better-than-expected holiday results, fueled by strong sales of digital and video gaming products. The nation's largest consumer electronics chain said it now expects fourth-quarter earnings to be in the range of $1.35 to $1.40 per share. Analysts surveyed by Thomson Financial/First Call expected $1.27 per share. Shares of Best Buy rose 63 cents to $75.39 in mid-afternoon trading on the New York Stock Exchange.. Best Buy is expected to report its results April 2. Best Buy said total sales in December were $3.9 billion, up 43 percent from a year ago. The results were driven by a 6.2 percent increase in sales at stores open at least a year, known as same-store sales, and the addition of 65 Best Buy stores in the past 12 months. Same-store sales are considered the best indicator of a retailer's health. The figures for the five-week period ended Jan. 5 also benefitted from the inclusion of Musicland's 1,300 stores, which were acquired last January, and from Future Shop's 95 stores in Canada, purchased last November. Same-store sales at Musicland -- which includes Media Play, On Cue, Sam Goody and Suncoast stores -- were up 3.8 percent. Sales at Future Shop stores were up 16.6 percent. Best Buy stores generated total quarterly sales of $3.16 billion in the period, up 18 percent from a year ago. Entertainment software sales posted the largest gains in the month, driven by sales of video gaming hardware and software and DVD movies. Sales of digital products -- including DVD hardware and software, digital cameras and camcorders and digital TVs -- are on track to account for 19 percent of sales this quarter, compared with 15 percent in the prior year's quarter. The positive results come on the heels of good news from its rival and second-largest consumer electronics chain Circuit City Stores Inc. It reported Monday that fourth-quarter results for its Circuit City Group, which includes all earnings from the company's Circuit City stores as well as about 64.5 percent of its earnings from CarMax stores, would beat Wall Street expectations, based on strong holiday sales. Earnings per share are now expected to range from 72 cents to 76 cents per share. Analysts polled by Thomson Financial/First Call anticipated 71 cents per share.