Originally created 06/17/04

Best Buy earns $114 million in first quarter

MINNEAPOLIS -- Best Buy Co. Inc. reported first-quarter earnings of $114 million as the nation's biggest consumer electronics chain saw its revenue climb 17 percent.

Best Buy said Wednesday that it earned 34 cents a share in the three months ended May 29 in contrast to a loss of $25 million, or 8 cents a share, during the same quarter last year - a loss due mostly to the Musicland business that it no longer owns. The company said that without Musicland, earnings for the first quarter last year would have been 21 cents a share.

The latest earnings beat by a penny a share the consensus estimate of analysts surveyed by Thomson First Call.

Revenue increased to $5.48 billion from $4.67 billion a year ago. The increase was driven by the addition of 84 new stores in the past year and a sales gain of 8.3 percent at its stores open at least a year.

Best Buy said it anticipates second-quarter earnings per share of 47 cents to 52 cents, compared with 42 cents a share in the comparable period last year. Analysts expected earnings of 50 cents a share for the second quarter.

For the year, the company said it expects to earn $2.80 to $2.93 per share, compared with analyst expectations of $2.88.

The guidance for the quarter assumes comparable-store sales gains of 5 percent to 7 percent, including gains in sales of products such as digital televisions and further expansion of Best Buy's "Geek Squad" technical support service.

In June 2003 Best Buy gave away Musicland, a mall-based music retailer, to a private investment company specializing in corporate turnarounds.

Best Buy held $2.1 billion in cash at the end of the quarter, up from $1.5 billion after the same quarter a year ago.

Despite beating earnings expectations, Best Buy shares were down $1.48, or 2.8 percent, to $51.60 in early trading on the New York Stock Exchange.

On Tuesday, smaller rival Circuit City Stores Inc. said its loss narrowed to $5.9 million in its first quarter as sales rose nearly 7 percent to $2.07 billion. Same-store sales increased slightly more than 6 percent.


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