Best Buy fourth-quarter earnings surge 84 percent

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Posted 11:33AM on Tuesday, April 2, 2002

EDEN PRAIRIE, Minn. - Best Buy Co. Inc., helped by strong sales of digital products and entertainment software as well as expense controls, reported that fourth-quarter profits surged 84 percent, beating Wall Street projections by a penny. But the nation's largest electronics chain also said Tuesday that first-quarter sales are modestly ahead of expectations and warned that projected earnings per share for the period will be lower than analysts' estimates. Shares of Best Buy slipped 3.7 percent, or $2.97, to $76.51 in morning trading on the New York Stock Exchange. For the quarter ended March 2, Best Buy earned $350 million, or $1.62 a share, compared with $190 million, or 89 cents per share, for the year-ago period. Analysts polled by Thomson Financial/First Call expected $1.61 per share. The company said it expects earnings per share for the first quarter to be about 30 cents to 32 cents. Analysts' consensus estimate was 34 cents a share. Sales for the fourth quarter rose 28 percent to $6.98 billion from $5.46 billion a year ago. The increase reflected the addition of 62 Best Buy stores in the previous 12 months, which brought the total to 481 stores. The company also operates about 1,320 Musicland stores and 95 Future Shop stores in Canada. Sales at stores open at least a year, known as same-store sales, rose 4.5 percent. Same-store sales are considered the best indicator of a retailer's health. "Our Musicland stores met our profitability targets despite reduced mall traffic, due to expense control and our remerchandising of Sam Goody stores. Also, our results at Future Shop have been significantly better than expected," said Richard Schulze, chairman and chief executive. For the full year, earnings were $570 million, or $2.65 per share, up 44 percent from $396 million, or $1.86 per share, a year ago. Sales rose 28 percent to $19.60 billion. Darren Jackson, senior vice president of finance and chief financial officer, said Best Buy still expects revenue growth of 17 to 20 percent and earnings growth of 18 to 21 percent for fiscal 2003, or $3.15 to $3.25 per share. That is in line with the consensus from analysts polled by Thomson Financial/First Call, who expect $3.15 a share.