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Best Buy Posts Sales, Earnings Growth

Minneapolis — Best Buy reported gains in net earnings and revenue for the fourth quarter and fiscal year, ended March 3.

During the fourth quarter, which was a week longer than the previous year’s quarter, total revenue increased 21 percent to $12.9 billion with a comp-store sales gain of 5.9 percent, due to that extra week of business, 231 new and acquired stores. Online sales had revenue growth of about 40 percent. Net earnings for the quarter were $763 million, up from the previous year’s fourth quarter of $644 million. Operating income as percent of revenue for the quarter was relatively flat vs. last year to 8.8 percent.

In the United States, total revenue was $11.08 billion for the quarter vs. the previous year’s $9.425 billion, with a comp-store sales gain of 4.8 percent vs. 7.4 percent for the same time last year. Domestically, operating income was $1.04 billion vs. the previous year’s final quarter of $893 million.

Brian Dunn, Best Buy’s president/COO, said, “Customers want to engage with someone who understands their unique needs, wants and desires — and more and more, they won’t accept something that feels solely like a transaction. This is great news for Best Buy because of the work we’ve done over the last three years, and because of the performance of our store teams. I’ve never been more confident about our ability to serve customers.”

“We’re in a unique position to deliver for customers,” Dunn continued, “to be their advocate, and help fulfill the promise of technology for them.”

During the 2007 fiscal fourth quarter, Best Buy’s comp-store sales gain was driven by higher revenue from flat-panel televisions, video gaming hardware and notebook computers. These gains more than offset comp-store sales declines in tube and projection TVs, printers, CDs and desktop computing.

Best Buy’s consumer electronics sales represented 46 percent of fourth-quarter revenue and posted an 8.5 percent comp-store sales gain. Within consumer electronics, flat-panel TVs experienced a strong double-digit comp-store sales gain as declining prices led to higher volumes and increased screen sizes. Total television comp-store sales grew by double-digits as flat-panel TV growth was partially offset by declines from tube and projection TVs. In addition, home theater installation services grew by strong triple digits, accompanying the high demand for flat-panel TVs. The company believes it gained significant market share in electronics, particularly flat-panel TVs, due to successful promotional strategies and its focus on providing solutions for customers. A low double-digit comp-store sales gain in MP3 players also added to the product group’s growth.

The entertainment software product group, which comprised 21 percent of fourth-quarter revenue, increased 9.2 percent on a comp-store sales basis.

Home office products, which accounted for 27 percent of fiscal 2007 fourth-quarter revenue, were steady with a comp-store sales increase of 0.2 percent. Contributing to the results was the launch of Microsoft’s Vista operating system, which accompanied double-digit comp-store sales increases for notebook computers and computer services.

Comp-store sales for appliances, which were 6 percent of fiscal 2007 fourth-quarter revenue, increased 0.5 percent. Amid a challenging housing market, this product group showed a modest gain from major appliances, partially offset by softness in small appliances, the chain said.

For the fiscal year revenue was $12.9 billion up from the previous year’s $10.7 billion. Operating income was $1.14 billion for the fiscal year ended March 3 vs. the previous year’s $955 million. Net earnings were $763 million up from $644 million the previous year. Domestically for the year, comp sales were up 4.1 percent, down 1 percent from the previous fiscal year.

CE, as part of Best Buy’s revenue mix last year, was 45 percent, up 2 percent from the previous year. Home office was down 2 percent, to 30 percent; entertainment software was down 1 percent, to 18 percent; and appliances were up 1 percent, to 7 percent.