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Best Buy Reports Q2 Earnings
Sep 13, 2005
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Best Buy Co., Inc. reported net earnings of U.S. $188 million, or $0.37 per diluted share, for the fiscal second quarter, which ended on Aug. 27, 2005. Net earnings increased 47 percent as compared with $127 million, or $0.26 per diluted share, for the second quarter of the prior year had Best Buy expensed stock-based compensation as it does in the current fiscal year.

The consumer electronics retailer reported that revenue increased 10 percent to $6.7 billion, driven by the opening of new stores and a comparable store sales gain of 3.5 percent. U.S. Best Buy stores reported revenue of $6.0 billion and a second-quarter comparable store sales gain of 3.8 percent, reflecting a higher average transaction than in the prior year's second quarter. The rise in the average transaction reflected continued customer interest in larger-ticket items such as MP3 players, notebook computers and flat-panel TVs. Magnolia Audio Video, a retailer of high-end consumer electronics, had revenue of $33 million, similar to its revenue for the prior year's quarter. Magnolia Audio Video reported a comparable store sales gain of 3.5 percent, which was offset by the closure of two stores in the past year. The company's international stores, comprised of Future Shop and Best Buy stores in Canada, generated revenue of $705 million, including the opening of new stores and a comparable store sales gain of 0.9 percent for the quarter, which was driven by a modest increase in the average transaction.

The consumer electronics product group, which represented 41 percent of revenue for the quarter, posted an 11.4 percent comparable store sales gain for the quarter and led the company's results again. Home office products, representing 36 percent of the quarter's revenue, reported a comparable store sales decline of 0.7 percent for the second quarter. Low-double-digit comparable store sales increases for notebook computers reflected expanded assortments and further customer interest in the benefits of portable technology. These results were offset by comparable store sales declines in monitors and desktop computers as well as telephones. Appliances represented 7 percent of revenue and reported a comparable store sales gain of 10.9 percent. The growth from the appliances product group was led by high-single-digit comparable store sales growth in major appliances, reflecting an expansion of the company's improved appliance assortments and labor model to more stores. In addition, a hot summer drove a strong double-digit comparable store sales gain in air-conditioning products.

During the second quarter of fiscal 2006, the company opened 15 U.S. Best Buy stores. It also opened four stand-alone Geek Squad stores in the quarter. In addition, the company opened two Canadian Best Buy stores and one Future Shop store in its international segment. At the end of the second quarter, the company operated 694 Best Buy stores, 20 Magnolia Audio Video stores and 10 stand-alone Geek Squad stores in the U.S.; it also operated 34 Best Buy stores and 116 Future Shop stores in Canada. For the trailing 12 months, the company opened 96 new stores and closed three stores.

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