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Best Buy Q2 Earnings Fall 30%

9/13/2011 09:21:43 AM Eastern

Minneapolis - Best
Buy reported a 30.3 percent decline in second-quarter profits, to $177 million,
and flat sales of $11.3 billion for the three months, ended Aug. 27.

U.S. sales slipped
1.5 percent to $8.3 billion, while comp-store sales declined 2.7 percent and
online sales rose 13 percent.

Broken out by
category, major appliances saw a 12 percent spike in comp sales, while the
mobile computing comps (including tablets) increased 12 percent, which were
offset by declines in TV, gaming, digital imaging and physical media. Best Buy
also reported a 4 percent increase in subscription services for the quarter.

Comp sales of
mobile phones fell 5 percent during the quarter, reflecting what the company
described as "industry softness due to a lack of significant new phone launches
during the quarter compared to the year-ago period."

Domestic gross
profit declined 3 percent to $2.1 billion due to lower sales, continued
promotions within select categories, and higher sales of services that include
deferred revenue.

Total operating
income declined 30 percent to $287 million due to the decline in gross profit
dollars and higher costs related to the net addition of 113 Best Buy Mobile
stand-alone stores and 14 big-box locations, as well as increased advertising.

In a statement,
CEO Brian Dunn said the company "made good progress on our key strategic focus
areas" despite lower CE industry sales and continued macro-economic challenges
to overall consumer spending.

He added that the
company is "well positioned to bring the benefits of our multichannel model to
our customers and shareholders."

Looking ahead, the
company has lowered its full-year earnings outlook and is projecting comp-store
sales in the range of flat to negative 3 percent for the current fiscal year.

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