Best Buy Co., Inc. reported comparable store sales for the fiscal quarter ended Nov. 29, 2003, increased 8.6 percent. Revenue from continuing operations rose 18 percent to U.S. $6.03 billion for the third quarter, compared with $5.13 billion last year.
The appliance and consumer electronics retailer said it expects third-quarter earnings from continuing operations of $0.35 to $0.37 per diluted share, which is within its previously reported guidance range of $0.33 to $0.38 per diluted share.
Consumer electronics products contributed the largest share of revenue, 37 percent, for the third quarter. The home office product category increased 2 percent to 36 percent, compared with the prior year's period. The home office category's performance was said to continue by ongoing growth in notebook computers desktop computers, computer networking products, and MP3 devices.An increased assortment in appliances and higher-end laundry, refrigerator, and dishwasher products benefited revenue. Special orders reportedly contributed to both the revenue increase and a slight gain in the average selling price.
Digital products -- including digital, plasma, and LCD TVs, digital cameras and camcorders, DVD hardware and software, cellular telephones, and digital broadcast systems -- comprised 27 percent of revenue for the third quarter of fiscal 2004, up from 23 percent for the same period last year.
Entertainment software products declined 1 percent to 21 percent. Both DVDs and CDs showed strong comparable store sales gains, as a new-release schedules and improved assortments were said to drive revenue. Increased revenue from computer security and productivity software fueled a gain in computer software, while comparable store sales for video game hardware and software declined, reflecting price decreases in several hardware platforms and slowing revenue from software.
Revenue for the domestic segment, including U.S. Best Buy and Magnolia Audio Video stores, rose 15 percent to $5.43 billion, reflecting a domestic comparable store sales gain of 9.0 percent.
For the international segment, which comprises Future Shop stores and Canadian Best Buy stores, revenue totaled approximately $600 million, an increase of 42 percent compared to the same period last year. The segment achieved a comparable store sales gain of 4.0 percent as reported average ticket and store traffic both improved for the quarter.
For the first 9 months of fiscal 2004, revenue from continuing operations for the retailer increased 15 percent, with a comparable store sales gain of 5.8 percent. Domestic revenue grew 13 percent for the same period, and international revenue rose to 39 percent.
"We are pleased that our gross profit rate for the third quarter will improve as we projected earlier," said Darren Jackson, Best Buy's executive vice president and finance and chief financial officer. "The gross profit rate benefited from improvements in our pricing and exceptional execution at the store level. These gains were partially offset by the impact of the increase of home office products in the revenue mix as well as the allowance for redemption of certificates earned through Reward Zone, our customer loyalty program."
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