Posted on Thu, Mar. 06, 2003
Best Buy sales up 9 percent in fourth quarter
KARREN MILLS
Associated Press
MINNEAPOLIS - Best Buy Co. Inc. said Thursday its fourth-quarter comparable store sales and online sales declined 0.2 percent at a time when the company had expected them to remain flat.
Comparable store sales, which Best Buy defines as sales at stores open at least 14 months instead of the usual 12, are considered a leading indicator of a retailer's health.
However, total sales for the fiscal quarter ended March 1 increased 9 percent to $7.61 billion, from $6.98 billion a year earlier. The increase reflected the opening of 90 new stores, including 67 Best Buy stores in the United States, eight Best Buy Canada stores, nine Future Shop stores and six Magnolia Hi-fi stores.
Best Buy also said fourth-quarter earnings before non-cash charges are expected to range from $1.07 to $1.10 a share, with fiscal 2003 earnings expected to range from $1.74 to $1.77 per share. The Thomson First Call consensus estimate of 24 analysts was $1.07 for the quarter and $1.74 for the fiscal year.
Best Buy is due to release its fourth quarter and fiscal 2003 results on April 1.
The company's Musicland group stores were the poorest performers, with total revenue down 15 percent to $580 million in the fourth quarter. Best Buy said it continues to evaluate its alternatives for the Musicland business, and expects to record a non-cash charge of about $110 million after taxes, or 34 cents a share, in the fourth quarter related to revaluation of Musicland's assets and corporate facilities the company is vacating.
Best Buy acquired Musicland in January 2001 for $696 million. In the first quarter of fiscal 2003, Best Buy took a non-cash charge of $308 million in connection with the acquisition.
Fourth-quarter sales for U.S. Best Buy stores increased 11 percent to $6.41 billion and results of international stores increased 23 percent to $580 million, the company said.
"While the challenging economic and political environment constrained revenue growth, I am pleased that we are on track to meet or exceed analysts' earnings expectations, before non-cash charges," said Brad Anderson, vice chairman and chief executive.
"As consumers pulled back on spending, we continued to effectively manage our promotional activity and expenses," Anderson said. "We believe we have well positioned Best Buy for the future, when consumer spending rebounds."
For the full fiscal year, Best Buy's revenue increased 16 percent to $22.71 billion, from $19.60 billion a year earlier. Comparable store sales increased 1.4 percent.
Consumer electronics remained the company's strongest product category in fiscal 2003, making up 32 percent of total revenue, because of continued popularity of digital TVs, digital camcorders and cameras, personal video recorders and satellite TV systems. Liquid crystal display and plasma televisions also sold well, Best Buy said.
Home office products continued to make up 26 percent of Best Buy's sales mix, as strong sales of notebook computers, wireless communications, MP3 players and peripherals nearly offset weakness in sales of desktop computers.
In the entertainment line, Best Buy said a strong increase in sales of DVD movies and video gaming offset comparable store sales declines in CDs.
