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Best Buy Q4 Net Soars 84%

4/02/2002 01:33:00 PM Eastern

Minneapolis - Boosted by strong sales, while expanding margins and leveraging fixed costs, Best Buy reported record total net earnings of $350 million in its fiscal fourth quarter, an 84 percent jump from the $190 million recorded in the same three months a year ago.

Total sales for the fourth quarter ended March 2 increased 28 percent, to $7 billion, up from $5.5 billion in the same period last year. This sales increase reflected the addition of 62 Best Buy stores in the past 12 months, as well as the inclusion of a full quarter of sales from about $1,320 Musicland stores and the addition of sales from 95 Future Shop stores.

'Our strong finish to the quarter and the year builds our optimism for the year ahead,' said Richard M. Schulze, chairman/CEO. 'We expect continued growth in revenues and earnings as we open new stores, leverage expertise across the brands and benefit from an improving economy.'

Best Buy cited the strong sales of DVD movies, camcorders and big-screen televisions as primary reasons for its jump in quarterly profit.

Total company sales over 12 months rose 28 percent, to $19.6 billion, up from $15.3 billion the previous year. Comp-stores sales increased 1.9 percent. Total net earnings jumped to $570 million for the 12 months, compared with $396 million year over year.

Much of the reasons for a 260-basis-point increase in gross profit margin in the fourth quarter can be attributed to changes in product mix at Best Buy stores. This includes significant growth in sales of digital CE products and entertainment software, combined with lower markdowns, a stable promotional environment and reduced costs associated with financing offers.

Looking at Best Buy stores separately, sales grew 9.4 percent in the fourth quarter, hitting $5.8 billion, compared with $5.3 billion in the same quarter last year. Comp-store sales increased 4.5 percent in the fourth quarter. Gross profit margin was up 150 basis points, to 21.6 percent

For the 12 months, Best Buy store sales reached $17.1 billion, compared with $15.2 billion year over year. Comp-store sales moved up 1.9 percent. Gross profit margin increased 140 basis points, to 21.2 percent.

Sales at Musicland stores in the fourth quarter hit $685 million, about flat with the $681 million reported in the same three months the prior year. For the 12 months, Musicland sales reached $1.88 billion, down from $1.92 billion the previous year.

First quarter Best Buy total sales to date are modestly ahead of original expectations, said the retailer. Comp-stores sales are on track to be 3 percent to 4 percent in the first quarter and for the fiscal year. The retailer anticipates revenue growth of 17 percent to 20 percent and earnings growth of 18 percent to 21 percent for the current fiscal year.

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