Appliance and electronics retailer Best Buy Co., Inc. reported earnings from continuing operations of U.S. $122 million, or $0.37 per diluted share, for the third quarter ended Nov. 29, 2003, an increase of 42 percent compared with $86 million, or $0.27 per diluted share, for the third quarter ended Nov. 30, 2002.
"Our achievement of a 42-percent earnings gain and an 18-percent revenue increase reflects the excellence and commitment of our employees," said Brad Anderson, vice chairman and CEO. "Our customer satisfaction scores, brand awareness and market share improved across the board for the quarter as well."
As reported previously, the company said revenue from continuing operations for the third quarter of fiscal 2004 increased 18 percent to $6.0 billion, driven by a comparable store sales gain of 8.6 percent and the addition of 72 new stores in the past 12 months.
The gross profit rate for continuing operations rose to 24.8 percent of revenue for the third quarter, an increase of 0.4 percent of revenue compared with the third quarter of fiscal 2003.
For the first 9 months of fiscal 2004, the retailer reported earnings from continuing operations of $331 million, or $1.01 per diluted share, a 36-percent increase compared with $244 million, or $0.75 per diluted share, for the first 9 months of fiscal 2003. Revenue increased 15 percent to $16.1 billion for the 9 months ended Nov. 29, 2003, including a comparable store sales gain of 5.8 percent. The operating income rate improved to 3.4 percent of revenue for the first 9 months of fiscal 2004, compared to a rate of 2.9 percent for the first nine months of fiscal 2003. The increase was primarily the result of expense leverage and an improvement in the gross profit rate.
"Primarily as a result of inclement weather in the northeast, quarter-to-date revenue trends are modestly below our expectations," said Darren Jackson, executive vice president and CFO. "However, we still expect a comparable store sales gain of 6 to 8 percent for the fourth quarter, including the benefit of an extra day of holiday shopping. That would bring us to fourth-quarter revenue of approximately $8.3 billion. We believe that we will continue to increase our market share in the fourth quarter, particularly in key products such as digital televisions, digital imaging and computing."
He added, "For the third quarter, the improvement in our year-over-year gross profit rate exceeded our expectations. We expect a modest gross profit rate increase again in the fourth quarter, based on year-over-year rate improvements in several product categories.
"The reduction in the third-quarter SG&A rate compared with the third quarter of fiscal 2003 was better than we anticipated, in light of the corporate technology impairment costs. The fourth-quarter SG&A rate is expected to be consistent with that of the fourth quarter of fiscal 2003, primarily due to increased customer centricity investments and incentive compensation."
Based on current projections for the business, the company provided its initial guidance on earnings from continuing operations for the fourth quarter of fiscal 2004 of $1.34 to $1.39 per diluted share, an 18-percent increase compared with $1.16 per diluted share for the prior year's fourth quarter. The average analyst estimate currently is $1.41 per diluted share for the fourth quarter of fiscal 2004, Best Buy said.
The company also reiterated its guidance for earnings from continuing operations for fiscal 2004 of $2.35 to $2.40 per diluted share, a 24-percent increase compared with $1.91 per diluted share in fiscal 2003. The average analyst estimate is $2.41 per diluted share.
The Company is expected to announce its December revenue on Jan. 8, 2004, its fourth-quarter revenue on March 4, 2004, and its fourth-quarter earnings on March 31, 2004.
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