MINNEAPOLIS -- Digital products continue to drive a strong performance at Best Buy Co. Inc., with net earnings jumping 54 percent in the first fiscal quarter of 2000. Income totaled $72.2 million for the period ended May 27, compared to $46.8 million for the three months ended May 29 in 1999.
Sales at Best Buy climbed 24 percent during the first fiscal quarter, reaching $2.96 billion, compared to $2.39 billion in the first quarter of the prior year.
Comp-store sales increased 9.5 percent, on top of the 13.3 percent jump reported in the first quarter of last year.
"Our record first-quarter results exceeded our expectations," said Richard M. Schulze, chairman/CEO. "Consumer excitement for digital products continues to drive Best Buy's strong performance. Digital products now comprise 10 percent of our overall sales mix, nearly double last year's first quarter."
Operating income margin was 3.7 percent for the quarter, a gain of 0.7 percent over the same three months last year. This increase resulted mainly from a 1 percentage point improvement in the gross profit margin in the first quarter, which was 20.4 percent of sales, compared to 19.4 percent in last year's first quarter. Gross profit margins benefited from both a higher margin sales mix and improved product margins, said Best Buy.
Selling, general and administrative expenses were 16.8 percent of sales, compared to 16.4 percent in last year's first quarter, reflecting primarily the costs of planned store openings and the launch of the retailer's e-commerce site.
The retailer also increased its net interest income to $8.5 million, compared to $4.4 million in the first quarter of 1999.
As part of Best Buy's strategic alliance with Microsoft Corp., which was finalized in the first quarter, Microsoft purchased $200 million in Best Buy common stock.
Best Buy opened four stores in the quarter, including entry into the Portland, Ore., market, with three stores, and one in Lafayette, Ind.