Best Buy Posts Strong Q4 Sales, Profits

Alan Wolf -- TWICE, 3/25/2010

Minneapolis - Best Buy reported strong double-digit sales and profit gains in its global and U.S. businesses for its fiscal fourth quarter ended Feb. 27.

Net earnings increased 38 percent to $810 million and net revenue rose 12 percent to $16.6 billion for the three-month period, reflecting a 7-percent gain in comparable store sales, the addition of new stores and the favorable impact of currency fluctuations.

Within the U.S., net revenue rose 11 percent to $12.6 billion and comp store sales increased 7.4 percent due to an increase in the average purchase.

The quarter's strongest product performers included notebook computers and mobile phones, which both saw low double-digit increases in comp store sales, and flat panel TVs, whose comp sales grew by the high single digits. The gains in these categories stemmed from unit growth, and notebook and TV volume was partially offset by declines in average selling prices, Best Buy said.

Weakest performers included music and movie software, which declined by the low double digits.

The chain estimates its market share grew about 2.6 percent for the three months ended Jan. 31, with the most pronounced increases coming in the critical flat panel, notebook, mobile phone and digital imaging categories.

For the full fiscal year, net earnings increased 35 percent to $1.4 billion and total revenue grew 10 percent to $49.7 billion, boosted by a 20-percent spike in online revenue, to about $2 billion.

Chief financial officer Jim Muehlbauer said the company was "very pleased" with its full-year performance. "We delivered a comparable store sales gain for the year, capitalized on market share opportunities and managed expenses to deliver a financial outcome well above the expectations we had at the beginning of the year," he said.

Looking ahead, Best Buy is projecting net revenue gains of 5 percent to 7 percent for the current fiscal year, which would total between $52 billion and $53 billion, and comp sale increases of 1 percent to 3 percent.

The revenue hikes reflect the planned opening of 50 to 55 Best Buy stores, mostly located in the U.S.; 75 to 100 small-format stores, comprised largely of U.S. Best Buy Mobile stores; and 10 to 15 Five Star stores in China.

"In fiscal 2010, we made a deliberate effort to profitably acquire new customers with the purpose of introducing them to the benefits of our connected world strategy. In fiscal 2011, we plan to capitalize on these actions to create stronger relationships with our customers and improve profits," Muehlbauer said.

Added Best Buy CEO Brian Dunn, "We believe the next stage of our growth will be fueled by our employees helping customers connect to the things and people they care most about, and our investments around the world flow directly from that point of view."