Originally created 04/01/04

Best Buy earnings jump sharply in fourth quarter



MINNEAPOLIS -- Fourth-quarter earnings at Best Buy Co. Inc. jumped 51 percent as the company benefited from new stores, sales gains and the absence of its former Musicland division.

The nation's largest consumer electronics chain also said Wednesday that its first quarter and full-year fiscal 2005 earnings would be higher than current analyst expectations.

Best Buy earned $469 million, or $1.42 per share, for the fourth quarter ending Feb. 28, up from $311 million, or 96 cents per share, for the same period last year. That would have been $378 million, or $1.16 per share, excluding its money-losing Musicland division, which the company divested in June.

Analysts surveyed by Thomson First Call expected $1.39 per share.

Revenue rose 21 percent to $8.45 billion from $6.99 billion.

Same-store sales, or sales at stores opened at least 14 months, the company's measure of comparable-store sales, increased 9.7 percent.

"It clearly has been a banner year for Best Buy," president Allen Lenzmeier told analysts.

For the full year, Best Buy earned $705 million, or $2.15 a share, up from $99 million, or 30 cents per share last year, when the company recorded a $441 million loss for Musicland.

Sales rose 17 percent to $24.55 billion, from $20.95 billion.

Lenzmeier said the company is in a "transformation" as it tries to become more customer-friendly. Its "Customer Centricity" initiative will be expanded from 32 stores to 100 by the end of this fiscal year, he said.

Best Buy also will expand its "Geek Squad" technical service into 425 stores in 45 U.S. markets, Lenzmeier said.

Geek Squad technicians wear FBI-like badges and black pants and ties. Best Buy bought Minneapolis-based Geek Squad in 2002. In those markets, the in-store Best Buy technical service desks will be re-branded as Geek Squad desks, Lenzmeier said.

"Our goal is to make the Geek Squad North America's largest national provider of in-home computer repair and installation services," Lenzmeier told analysts.

Best Buy said it expects earnings of $2.80 to $2.93 per share for fiscal 2005. Analysts surveyed by Thomson First Call had been predicting $2.80. Best Buy predicted first-quarter earnings of 30 to 35 cents per share, up from the 28 cents predicted by analysts.

Best Buy shares jumped $3.85, nearly 8 percent, to $52.25 in afternoon trading on the New York Stock Exchange.