Minneapolis - Cheered by results that exceeded Wall Street expectations, Best Buy reported $55 million in net earnings for its fiscal first quarter, about a 24 percent drop from the $72 million recorded in the year-ago period.
Net earnings, however, were down about 15 percent on a pro forma basis, from the $65 million reported in the same three months last year.
'We had expected earnings to decline in a decelerating economy,' said Richard M. Schulze, chairman/CEO. 'Both Best Buy and Musicland produced bottom-line results that were ahead of plan. I remain confident we are on track to deliver earnings growth of 16 percent to 18 percent this year.'
Total sales for the first quarter ended June 2, climbed 25 percent to $3.70 billion, up from $2.96 billion in the first quarter of 2000, and $3.37 billion on a pro forma basis. The 25 percent increase reflects the addition of 69 Best Buy stores in the past 12 months as well as sales from 1,300 Musicland stores acquired in the fourth quarter of the past fiscal year. (TWICE, June 11, p. 1)
Pro forma results combine the operations of Best Buy and Musicland, as though Musicland had been acquired at the beginning of the fiscal year.
Comp-store sales at Best Buy stores, boosted by gains in digital TVs and camcorders, DVD movies, video games and wireless communications, declined 3.1 percent in the first quarter, compared with the same period last year.
'We expect comp-store sales to be essentially flat during the second quarter, as growth in other product areas is muted by continued weakness in sales of desktop computers,' said Schulze. 'We expect modest comp-store sales improvement in the second half of the fiscal year, along with continued improvement in our product mix and on-plan performance from Musicland.'
Gross profit margin as a percent of sales climbed 50 basis points to 22.9 percent in the first quarter on a pro forma basis, compared with a year ago. Selling, general & administrative expenses as a percent of sales were off 120 basis points to 20.4 percent on a pro forma basis, compared with the first quarter in 2000.