Best Buy’s Profit Up 21%; Stock Gets Boost

Best Buy Co., the largest U.S. electronics retailer, said Wednesday that fiscal third-quarter earnings rose 21%, helped by cost cutting and early holiday sales of flat-panel televisions.

The results beat analyst forecasts, sending the company’s shares to their highest level in more than eight months.

Net income increased to $148 million, or 45 cents a share, from $122 million, or 37 cents, a year earlier, Richfield, Minn.-based Best Buy said. Revenue in the three months ended Nov. 27 climbed 10% to $6.65 billion, the smallest gain in seven years.

Chief Executive Brad Anderson added $2,300 flat-panel TVs and trimmed expenses by outsourcing information technology operations. Best Buy, whose sales are outpacing rival Circuit City Stores Inc.’s, will benefit from rising demand for electronics, which this quarter may lead all gift categories, consultant Britt Beemer of America’s Research Group said.

Best Buy was expected to earn 44 cents a share, the average estimate of 29 analysts surveyed by Thomson First Call. Profit in the current quarter will be $1.56 to $1.66 a share as same-store sales rise 3% to 5%, the company said. That compares with the $1.62 average estimate from analysts.

“We’re on plan for December and we’re confident about a good holiday season at this stage,” Anderson said. This season is similar to 1999, when the heaviest holiday shopping occurred in the final days of the November-December period, he said.

Shares of Best Buy rose $2.82, or 5%, to $58.86 on the New York Stock Exchange. They have risen 13% this year.

The company narrowed its full-year profit forecast to as much as $2.90 a share from as much as $2.93.

Best Buy said higher gasoline and medical-care prices were hurting sales to lower-income consumers.