Best Buy’s Quarterly Earnings Up

Best Buy Co., the largest U.S. electronics retailer, said fiscal fourth-quarter profit rose 13% on holiday sales of flat-panel televisions, MP3 players and notebook computers.

Net income climbed to $644 million, or $1.29 a share, matching analysts’ estimates. Earnings were $572 million, or $1.13, a year earlier. Sales jumped 16% to $10.7 billion, the largest gain in two years. Sales at stores open at least a year rose 7.3% and the company forecast annual earnings above analysts’ expectations. The Richfield, Minn., retailer said it planned to hire 1,000 employees to boost sales of high-end home theater systems.

Best Buy said consumer electronics sales rose 18% in the quarter ended Feb. 25, outstripping all other categories. Appliance sales increased 5.5% and home office products revenue gained 2.5%.

Last year, Best Buy hired more than 2,500 employees for its Geek Squad home installation service, which sets up computers, printers and electronics for customers.

Best Buy forecast fiscal 2007 earnings of as much as $2.80 a share, including up to 5 cents in reorganization and severance costs. Analysts estimate profit of $2.64 a share.

Sales for the fiscal year may rise as much as 13% to $35 billion, Best Buy said Thursday. Sales at stores open at least a year may increase 3% to 5%, the company said.

Gross margin, or the percentage of sales left after subtracting the cost of goods sold, widened to 24.96% in the fourth quarter from 23.53%. For the year, Best Buy’s profit rose to $1.14 billion, or $2.27 a share, from $984 million, or $1.96. Sales climbed 12% to $30.8 billion.

The company is tailoring stores to lure small-business customers, affluent professionals, suburban mothers and young people.

Best Buy shares rose 26 cents to $54.78 on Thursday.