Best Buy Shares Surge After Better Than Expected Q4

The Richfield, Minn.-based retailer earned $570 million, or $1.35 per diluted share, on $14.72 billion in sales for the fourth fiscal quarter ended Feb. 28. In the year-ago quarter, Best Buy earned $737 million, or $1.71 per diluted share, on $13.42 billion in sales.

The results include about $112 million in one-time charges, mostly related to buyouts and layoffs. Excluding the charges, Best Buy would have earned $682 million, or $1.61 per share, which was higher than analysts' consensus estimates of $1.38 per share, excluding charges.

"We prepared for reduced consumer spending, and we were pleased when the quarter finished stronger than it began," said Brad Anderson, CEO and vice chairman of Best Buy, in a statement. "This company continues to innovate and take market share because of our culture, our talented employees and our commitment to serving customers."

Best Buy's sales of consumer electronics products fell 8.6 percent in the quarter from comparable store sales, compared with the same period last year. Home office products sales increased 8.1 percent. Services was the only other category to show same-store growth, at 2.2 percent compared with last year.

Home office products now account for 30 percent of revenue, up from 26 percent in the fourth quarter last year.

"A low double-digit comparable store sales increase for notebook computers fueled the growth as customers increasingly view notebook computers as a necessary utility," the company wrote in a statement. "Mobile phones and accessories experienced a nearly triple-digit comparable store sales gain, reflecting significant market share gains."

Best Buy's revenue increase was helped by 213 new stores. Same-store revenue fell 4.9 percent in the quarter, which was driven by a reduction in customer traffic, partially offset by an increase in the average transaction, the company said.

In the U.S., January and February same-store sales fell 2.9 percent, a stronger performance than December when comparable store sales fell 6.8 percent.

"I'm proud of what our employees delivered during this difficult quarter," said Brian Dunn, president and COO of Best Buy, in a statement. Dunn will succeed Anderson as CEO in June. "We responded quickly and effectively to the rapid changes in the macro-economic climate. It's challenging to accurately gauge the level of demand, which has resulted in inventory gaps that have limited our ability to fully meet customer demand. We're addressing those areas and we continue to see tremendous opportunities around us. We remain focused on what matters most to us -- helping customers get what they want and need out of technology."

For fiscal 2010, Best Buy expects revenue between $46.5 billion and $48.5 billion, with earnings of $2.50 to $2.90 per share, according to the company.

Analysts were projecting earnings of $2.47 per share for fiscal 2010 on sales of $48.05 billion. Best Buy also expects to open 65 new stores in the current fiscal year, 45 domestically.

For the just completed fiscal year, Best Buy earned $1 billion, or $2.39 per diluted share, on $45.02 billion in sales.

After the announcement, Best Buy shares were trading at $38.88, up $5.42 per share. The company's earnings helped spur an early rally on Wall Street. The Dow Jones was up 0.8 percent while Nasdaq was up 2 percent Thursday morning.