Best Buy Co., the nation's leading consumer electronics dollar-volume leader, posted a 27 percent rise in net earnings for its fiscal first quarter, hitting $70 million, up from $50 million in the year-ago three months.
Overall company sales, reported for the three months ended June 1, grew to $4.6 billion, up 24 percent from the $3.7 billion recorded in the same period in 2001. The sales increase reflects the addition of new stores as well as inclusion of sales from 97 Future Shop stores. Comp-store sales, which don't include Future Shop units, climbed 5.7 percent in the first quarter for stores open at least 14 months.
"Our Best Buy stores attracted high levels of customer traffic, and our Musicland stores met our revised sales targets," said Dick Schulze, chairman/CEO. "Our domestic stores continue to expand their gross profit margins, as digital products continued to increase in the mix."
Looking ahead, Best Buy expects overall comp-store growth of 4 percent to 5 percent in the second quarter. For the fiscal year, the retailer anticipates revenue growth of 17 percent to 20 percent and earnings growth of 18 percent to 21 percent.
Total sales for domestic stores, including Best Buy, Musicland and Magnolia Hi-Fi, grew 16 percent, to $4.3 billion in the first quarter, up from $3.7 billion year over year.
As reported, Best Buy store sales grew 18 percent in the first quarter, to $3.88 billion, while same-store sales rose 6.6 percent. Musicland store sales were flat, at $384 million, while same-store sales dipped 1.2 percent. Comps at Magnolia Hi-Fi fell by the low double digits.
Gross profit margin for domestic locations climbed 20 basis points, to 23.1 percent in the first quarter. This was driven by a modestly higher margin sales mix, with more digital products at Best Buy stores and lower costs associated with consumer financing offers.
Selling, general and administrative (SG&A) expenses for the first three months at domestics stores were reduced 10 basis points, to 20.3 percent.
"Future Shop stores have performed slightly better than expected, due to growth in sales of digital products and video gaming," said Schulze. Future Shop sales climbed 15 percent to $303 million, with comps rising 9.6 percent. However, gross profit margin dropped 50 basis points, to 24.7 percent, while SG&A increased 140 basis points, to 26.5 percent. Operating loss was $5 million.