Notebooks, Home-Office Products Spur Best Buy 1Q Sales Growth

Best Buy's net income dropped, but the retailer topped Wall Street estimates and earned $179 million, or 43 cents per share, on $8.99 billion in sales for its first fiscal quarter ended May 31, 2008.

Analysts were expecting earnings of 37 cents per share and $8.57 billion in sales, according to Thomson Financial. Best Buy earned $192 million, or 39 cents per share, on $7.92 billion in sales in the year-ago quarter.

Domestic sales grew 11 percent, due in large part to the addition of 106 stores in the past 12 months. Sales from comparable stores increased 3.5 percent in the quarter. Comparable store sales measures revenue only from stores that were operating a year ago.

Minneapolis-based Best Buy estimates that it gained 1.5 percent market share in the U.S. vs, the year-ago quarter, with key gains in TVs, computers, video games and mobile phones. In addition, the company said the addition of Apple and Dell products helped increase sales.

"We are very clear on our growth goals—particularly at the store level, where we are getting outstanding traction on locally driven growth ideas," said Brian Dunn, president and COO of Best Buy, in a statement. "We have an amazing opportunity to pair the power of our scale with our local insights which are closest to the customer—and we see many indicators that our growth propositions are working."

The company reaffirmed its fiscal-year revenue expectations of $43 billion to $44 billion, assuming a comparable store sales gain of 1 percent to 3 percent for the year.

Best Buy's home-office business showed the largest increase, 9.3 percent in comparable U.S. store sales, and now accounts for 31 percent of total revenue, up from 29 percent last year.

Notebook computers and mobile phones grew at a double-digit percentage, while comparable store sale declines were seen in printers, landline phones and computer networking products, according to the company.

Consumer electronics accounted for 39 percent of total revenue in the U.S. for the quarter, down from 40 percent in the year-ago quarter.

Best Buy's services sales accounted for 6 percent of total sales and increased 5 percent in comparable stores from the year-ago period.

On May 14, Best Buy paid a dividend of 13 cents per share, or $54 million total. Best Buy shares were trading at $45.64, down 24 cents or 0.5 percent, Tuesday morning.